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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): November 9, 1998
SAFEWAY INC.
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(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
Delaware 1-00041 94-3019135
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<S> <C> <C>
(State or other jurisdiction of (Commission File Number) (I.R.S. Employer Identification
Incorporation) Number)
</TABLE>
5918 Stoneridge Mall Road, Pleasanton, California 94588
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(Address of principal executive offices) (Zip Code)
(925) 467-3000
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(Registrants' telephone number, including area code)
N/A
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(former name or former address, if changed since last report)
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ITEM 5. OTHER EVENTS
On November 9, 1998, we completed an underwritten offering of
$400,000,000 aggregate principal amount of our 5 3/4% Notes Due 2000 (the
"2-Year Notes"), $400,000,000 aggregate principal amount of our 5 7/8% Notes Due
2001 (the "3-Year Notes"), $350,000,000 aggregate principal amount of our 6.05%
Notes Due 2003 (the "5-Year Notes") and $250,000,000 aggregate principal amount
of our 6 1/2% Notes Due 2008 (the "10-Year Notes" and, together with the 2-Year
Notes, the 3-Year Notes and the 5-Year Notes, the "Securities") under our
Registration Statement on Form S-3, filed with the Securities and Exchange
Commission (the "Commission") on October 20, 1998 (File No. 333-65903), as
amended by Amendment No. 1 filed with the Commission on October 26, 1998 (as
amended, the "Registration Statement") (which Registration Statement also
constitutes, pursuant to Rule 429 under the Securities Act of 1933, as amended,
Post-Effective Amendment No. 1 to Registration Statement No. 333-32741, as
amended), a Prospectus, dated October 27, 1998, and the related Prospectus
Supplement, dated November 3, 1998, relating to our offer and sale of the
Securities.
The sale of the Securities was underwritten by Morgan Stanley
& Co. Incorporated, BT Alex. Brown Incorporated, Chase Securities Inc., Lehman
Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Salomon Smith
Barney Inc., First Chicago Capital Markets, Inc. and Scotia Capital Markets
(USA) Inc. pursuant to an Underwriting Agreement, dated November 3, 1998. The
terms and conditions of the Securities and related matters are set forth in the
Indenture, dated as of September 10, 1997, between us and The Bank of New York,
as trustee (the "Indenture") and, pursuant to Sections 2.2 and 10.4 of the
Indenture, the Officers' Certificate filed as Exhibit 4.2 hereto.
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ITEM 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) The following exhibits are filed as part of this Report:
1 Underwriting Agreement, dated November 3, 1998, among
Safeway Inc. and Morgan Stanley & Co. Incorporated,
BT Alex. Brown Incorporated, Chase Securities Inc.,
Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Salomon Smith Barney Inc., First
Chicago Capital Markets, Inc. and Scotia Capital
Markets (USA) Inc.
4.1 Indenture, dated as of September 10, 1997, between
Safeway Inc. and The Bank of New York, as Trustee
(incorporated by reference to Exhibit 4.1 to the
Registrant's Form 8-K dated September 10, 1997).
4.2 Officers' Certificate, dated as of November 9, 1998,
pursuant to Sections 2.2 and 10.4 of the Indenture.
4.3 Form of 5 3/4% Note Due 2000.
4.4 Form of 5 7/8% Note Due 2001.
4.5 Form of 6.05% Note Due 2003.
4.6 Form of 6 1/2% Note Due 2008.
99 Prospectus Supplement dated November 3, 1998 and
accompanying Prospectus dated October 27, 1998.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Dated: November 9, 1998
SAFEWAY INC.
By: /s/ David Weed
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David Weed
Executive Vice President and
Chief Financial Officer
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EXHIBIT INDEX
Exhibits
1 Underwriting Agreement, dated November 3, 1998, among Safeway Inc. and
Morgan Stanley & Co. Incorporated, BT Alex. Brown Incorporated, Chase
Securities Inc., Lehman Brothers Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated, Salomon Smith Barney Inc., First Chicago Capital
Markets, Inc. and Scotia Capital Markets (USA) Inc.
4.1 Indenture, dated as of September 10, 1997, between Safeway Inc. and The
Bank of New York, as Trustee (incorporated by reference to Exhibit 4.1
to the Registrant's Form 8-K dated September 10, 1997).
4.2 Officers' Certificate, dated as of November 9, 1998, pursuant to
Sections 2.2 and 10.4 of the Indenture.
4.3 Form of 5 3/4% Note Due 2000.
4.4 Form of 5 7/8% Note Due 2001.
4.5 Form of 6.05% Note Due 2003.
4.6 Form of 6 1/2% Note Due 2008.
99 Prospectus Supplement dated November 3, 1998 and accompanying
Prospectus dated October 27, 1998.
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EXHIBIT 1
$1,400,000,000
SAFEWAY INC.
$400,000,000 5 3/4% NOTES DUE 2000
$400,000,000 5 7/8% NOTES DUE 2001
$350,000,000 6.05% NOTES DUE 2003
$250,000,000 6 1/2% NOTES DUE 2008
UNDERWRITING AGREEMENT
November 3, 1998
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November 3, 1998
Morgan Stanley & Co. Incorporated
BT Alex. Brown Incorporated
Chase Securities Inc.
Lehman Brothers Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Smith Barney Inc.
First Chicago Capital Markets, Inc.
Scotia Capital Markets (USA) Inc.
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, New York 10036
Dear Sirs and Mesdames:
Safeway Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to the several Underwriters named in Schedule I hereto (the
"Underwriters") $400,000,000 aggregate principal amount of its 5 3/4% Notes Due
2000 (the "Notes Due 2000"), $400,000,000 aggregate principal amount of its
5 7/8% Notes Due 2001 (the "Notes Due 2001"), $350,000,000 aggregate principal
amount of its 6.05% Notes Due 2003 (the "Notes Due 2003") and $250,000,000
aggregate principal amount of its 6 1/2% Notes Due 2008 (the "Notes Due 2008")
(collectively, the "Securities") to be issued pursuant to the provisions of an
Indenture dated as of September 10, 1997 (the "Indenture") between the Company
and The Bank of New York, as Trustee (the "Trustee").
The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement (Registration No.
333-65903), including a prospectus, relating to the Securities and has filed
with, or transmitted for filing to, or shall promptly hereafter file with or
transmit for filing to, the Commission (i) a prospectus supplement (the
"Prospectus Supplement") specifically relating to the Securities pursuant to
Rule 424 under the Securities Act of 1933, as amended (the "Securities Act"),
and (ii) a related prospectus dated October 27, 1998 (the "Basic Prospectus").
The registration statement, as amended, constitutes post-effective amendment No.
1 to the Company's registration statement (Registration No. 333-32741), as
amended. The term "Registration Statement" means the registration statement
(Registration No. 333-65903), as amended to the date of this Agreement. The term
"Prospectus" means the Basic Prospectus together with the Prospectus Supplement.
The term "preliminary prospectus" means a preliminary prospectus supplement
specifically relating to the Securities, together with the Basic Prospectus. As
used herein, the terms "Basic Prospectus," "Prospectus" and "preliminary
prospectus" shall include in each case the documents incorporated by reference
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therein, and the term "Registration Statement" shall include the documents
incorporated or deemed to be incorporated by reference therein. The terms
"supplement," "amendment" and "amend" as used herein shall include all documents
deemed to be incorporated by reference in the Prospectus that are filed
subsequent to the date of the Basic Prospectus by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
1. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to and agrees with each of the Underwriters that:
(a) The Registration Statement has become effective; no stop
order suspending the effectiveness of the Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission.
(b) The Registration Statement, when it became effective, did
not contain and such Registration Statement, as amended or
supplemented, if applicable, will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
(ii) the Registration Statement and the Prospectus comply and, as
amended or supplemented, if applicable, will comply in all material
respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading, except
that the representations and warranties set forth in this Section 1(b)
do not apply (A) to statements or omissions in the Registration
Statement or the Prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter
expressly for use therein or (B) to that part of the Registration
Statement that constitutes the Statement of Eligibility (Form T-1)
under the Trust Indenture Act of 1939, as amended (the "Trust Indenture
Act"), of the Trustee.
(c) Each preliminary prospectus filed pursuant to Rule 424
under the Securities Act, complied when so filed in all material
respects with the Securities Act and applicable rules and regulations
of the Commission thereunder; and no order preventing or suspending the
use of any preliminary prospectus has been issued by the Commission
(except to the extent that any preliminary prospectus supplement did
not so comply in a manner corrected in the Prospectus).
(d) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Securities Act or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), as applicable, and the rules and regulations of
the Commission thereunder; and any further documents so filed and
incorporated by reference in the Prospectus or any further amendment or
supplement thereto, when such documents become effective or are filed
with the Commission, as the case may be, will conform in all
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material respects to the requirements of the Securities Act or the
Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder.
(e) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the State
of Delaware, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in the State of
California and in each other jurisdiction in which such qualification
is required, except to the extent that the failure to be so qualified
or be in good standing would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(f) Each subsidiary, if any, of the Company which is a
"significant subsidiary" as defined in Rule 405 of Regulation C of the
Securities Act has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation.
(g) This Agreement has been duly authorized, executed and
delivered by the Company.
(h) The Indenture has been duly qualified under the Trust
Indenture Act and has been duly authorized, executed and delivered by
the Company and is a valid and binding agreement of the Company,
enforceable in accordance with its terms except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally and (ii) rights of acceleration,
if any, and the availability of equitable remedies may be limited by
equitable principles of general applicability.
(i) The Securities have been duly authorized by the Company
and, when executed and authenticated in accordance with the provisions
of the Indenture and delivered to and paid for by the Underwriters in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be valid and legally binding
obligations of the Company, enforceable in accordance with their terms
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and (ii) rights of acceleration, if any,
and the availability of equitable remedies may be limited by equitable
principles of general applicability.
(j) The execution and delivery by the Company of, and the
performance by the Company of its obligations under, this Agreement,
the Indenture and the Securities will not result in any violation of
the Restated Certificate of Incorporation or the By-Laws of the Company
or any agreement or other instrument binding upon the Company or any of
its subsidiaries that is material to the Company and its subsidiaries,
taken as a whole, or any statute or any order, rule or regulation of
any governmental body, agency or court having jurisdiction over the
Company or any subsidiaries, and no consent, approval,
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authorization or order of, or qualification with, any governmental body
or agency having jurisdiction over the Company is required for the
performance by the Company of its obligations under this Agreement, the
Indenture and the Securities, except such as may be required under the
Securities Act and the rules and regulations thereunder, and the
Exchange Act and the rules and regulations thereunder, the Trust
Indenture Act and the securities or Blue Sky laws of the various states
in connection with the offer and sale of the Securities.
(k) The financial statements (together with the related notes
thereto) incorporated by reference in the Registration Statement and
the Prospectus present fairly the financial position of the Company and
its consolidated subsidiaries as of and at the dates indicated and the
results of their operations for the periods specified, except as
otherwise disclosed therein; and except as otherwise stated therein or
in the Registration Statement and the Prospectus, said financial
statements have been prepared in conformity with generally accepted
accounting principles in the United States applied on a consistent
basis.
(l) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Prospectus.
(m) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending or, to the Company's
knowledge, threatened, to which the Company or any of its subsidiaries
is a party or to which any of the properties of the Company or any of
its subsidiaries is subject that are required to be described in the
Registration Statement or the Prospectus and are not so described or
any statutes, regulations, contracts or other documents that are
required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement
that are not described or filed as required.
(n) The Company is not an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
2. AGREEMENT TO SELL AND PURCHASE. The Company hereby agrees
to sell to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective principal amounts of Securities set forth in Schedule I
hereto opposite its name at a purchase price of 99.524% of the principal amount
of the Notes Due 2000, 99.363% of the principal amount of the Notes Due 2001,
99.228% of the principal amount of the Notes Due 2003 and 99.058% of the
principal amount of the Notes Due 2008.
3. TERMS OF PUBLIC OFFERING. The Company is advised by you
that the Underwriters propose to make a public offering of their respective
portions of the Securities as soon after this Agreement has become effective as
in your judgment is advisable. The Company is further advised by you that the
Securities are to be offered to
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the public initially at 99.774%, in the case of the Notes Due 2000, 99.713%, in
the case of the Notes Due 2001, 99.828%, in the case of the Notes Due 2003, and
99.708%, in the case of the Notes Due 2008, of their respective principal
amounts (the "Public Offering Prices") plus, in each case, accrued interest, if
any, from November 9, 1998 to the date of payment and delivery and to certain
dealers selected by you at a price that represents a concession not in excess of
.150%, in the case of the Notes Due 2000, .250%, in the case of the Notes Due
2001, .350%, in the case of the Note Due 2003, and .400%, in the case of the
Notes Due 2008, of their respective principal amounts under the Public Offering
Price, and that any Underwriter may allow, and such dealers may reallow, a
concession, not in excess of .075%, in the case of the Notes Due 2000, .125%, in
the case of the Notes Due 2001, .250%, in the case of the Notes Due 2003, and
.250%, in the case of the Notes Due 2008, of their respective principal amounts
of such series of Securities, to any Underwriter or to certain other dealers.
4. PAYMENT AND DELIVERY. Payment for the Securities shall be
made in Federal or other immediately available funds to an account designated by
the Company at 7:00 A.M., California time, on November 9, 1998, or at such other
time on the same or such other date, not later than November 23, 1998, as shall
be designated in writing by you. The time and date of such payment are
hereinafter referred to as the "Closing Date."
Payment for the Securities shall be made against delivery to
you for the respective accounts of the several Underwriters of global
certificates representing the Securities registered in the name of Cede & Co.
with any transfer taxes payable in connection with the transfer of the
Securities to the Underwriters duly paid.
5. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligation
of the Company to sell the Securities to the Underwriters and the several
obligations of the Underwriters to purchase and pay for the Securities are
subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement
and prior to the Closing Date:
(i) there shall not have occurred any downgrading,
nor shall any notice have been given of any intended or
potential downgrading, in the rating accorded any of the
Company's securities by any "nationally recognized statistical
rating organization," as such term is defined for purposes of
Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any
development involving a prospective change, in the condition,
financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a
whole, from that set forth in the Prospectus that, in your
judgment, is material and adverse and that makes it, in your
judgment, impracticable to market the Securities on the terms
and in the manner contemplated in the Prospectus.
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(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer
of the Company, to the effect set forth in clause (a)(i) above and to
the effect that the representations and warranties of the Company
contained in this Agreement are true and correct as of the Closing Date
and that the Company has complied in all material respects with all of
the agreements and satisfied in all material respects all of the
conditions on its part to be performed or satisfied hereunder on or
before the Closing Date (the officer signing and delivering such
certificate may rely upon his or her knowledge as to proceedings
threatened).
(c) Latham & Watkins, counsel for the Company, shall have
furnished to you their written opinion dated the Closing Date, in form
and substance satisfactory to you, to the effect that:
(i) the Company has been duly incorporated and is
validly existing and in good standing under the laws of the
State of Delaware with corporate power and authority to own,
lease and operate its properties and to conduct its business
as described in the Prospectus;
(ii) this Agreement has been duly authorized,
executed and delivered by the Company;
(iii) the Indenture has been (a) duly qualified under
the Trust Indenture Act and (b) duly authorized, executed and
delivered by the Company and is a legally valid and binding
agreement of the Company, enforceable in accordance with its
terms;
(iv) the Securities have been duly authorized and
executed by the Company and, when duly authenticated by the
Trustee in accordance with the terms of the Indenture and
delivered to and paid for by the Underwriters in accordance
with the terms of this Agreement, will be legally valid and
binding obligations of the Company, enforceable in accordance
with their terms;
(v) the issue and sale of the Securities being
delivered at the Closing Date by the Company and the
compliance by the Company with the provisions of this
Agreement and the Indenture will not result in the violation
by the Company of its Restated Certificate of Incorporation or
By-laws or any federal, New York or California statute, rule
or regulation known to such counsel to be applicable to the
Company (other than federal securities laws, which are
specifically addressed elsewhere in such counsel's opinion, or
state securities laws, as to which such counsel need not
express an opinion) or result in a material breach or
violation of any of the terms or provisions of, or constitute
a default under, any of the indentures relating to the 9.30%
Senior Secured Debentures due 2007, 10% Senior Notes due 2002,
10% Senior Subordinated Notes due 2001, 9.875% Senior
Subordinated Debentures due 2007, 9.65% Senior Subordinated
Debentures due 2004, 9.35% Senior Subordinated Notes due
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1999, 6.85% Senior Notes due 2004, 7.00% Senior Notes due 2007
or 7.45% Senior Debentures due 2027, or the bank credit
agreement between the Company and a consortium of banks led by
Bankers Trust Company;
(vi) no consent, approval, authorization or order of,
or filing with, any federal, New York or California court or
governmental agency or body is required for the issue and sale
of the Securities except such as have been obtained under the
Securities Act and such as may be required under state
securities laws in connection with the purchase and
distribution of the Securities by the Underwriters as to which
such counsel need not express an opinion;
(vii) each document incorporated by reference in the
Prospectus (other than the financial statements, schedules and
other financial data included or incorporated by reference
therein, as to which such counsel need express no opinion),
when it became effective or was filed with the Commission, as
the case may be, appeared on its face to comply as to form in
all material respects with the requirements of the Exchange
Act and the rules and regulations of the Commission
thereunder. In passing upon the compliance as to form of each
of such documents, such counsel may assume that the statements
made and incorporated by reference therein are correct and
complete;
(viii) the statements in the Prospectus under the
captions "Description of the Securities" and "Description of
Debt Securities" in each case insofar as such statements
constitute summaries of legal matters are accurate in all
material respects and the Securities conform in all material
respects to the description thereof in the Prospectus;
(ix) the Company is not an "investment company" as
such term is defined in the Investment Company Act of 1940, as
amended;
(x) the Registration Statement and the Prospectus (in
each case excluding the documents incorporated by reference
therein, and except for financial statements, schedules and
other financial data included or incorporated by reference
therein, and excluding the Form T-1, as to which such counsel
need express no opinion) comply as to form in all material
respects with the requirements for registration statements on
Form S-3 under the Securities Act and the applicable rules and
regulations of the Commission thereunder. In passing upon the
compliance as to form of the Registration Statement and the
Prospectus, such counsel may assume that the statements made
and incorporated by reference therein are correct and
complete; and
(xi) the Registration Statement has become effective
under the Securities Act and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement has been issued under the Securities Act and no
proceedings therefor have been initiated by the
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Commission; and the Prospectus has been filed in accordance
with Rule 424(b) under the Securities Act.
In addition, such counsel shall state that they have
participated in conferences with officers and other
representatives of the Company, representatives of the
independent public accountants for the Company, and your
representatives, at which the contents of the Registration
Statement and the Prospectus and related matters were
discussed and, although such counsel is not passing upon, and
does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the
Registration Statement and the Prospectus and such counsel has
not made any independent check or verification thereof (except
as set forth in paragraph (viii) above), during the course of
such participation, no facts came to such counsel's attention
that have caused such counsel to believe that the Registration
Statement (including the documents incorporated by reference
therein), at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus
(including the documents incorporated by reference therein),
as of its date or as of the Closing Date, contained or
contains an untrue statement of a material fact or omitted or
omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; it being understood that
such counsel need express no belief with respect to the
financial statements, schedules and other financial data
included in the Registration Statement or the Prospectus or
incorporated by reference therein or with respect to the Form
T-1.
In rendering such opinion, such counsel may state
that they express an opinion only as to federal securities
laws, New York and California law and the General Corporation
Law of the State of Delaware. Such opinion may also be subject
to customary assumptions and limitations, including that
opinions on enforceability may be subject to the following
exceptions, limitations and qualifications: (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to or
affecting the rights and remedies of creditors; (ii) the
effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or law, and the
discretion of the court before which any proceeding therefor
may be brought; (iii) the unenforceability under certain
circumstances under law or court decisions of provisions
providing for the indemnification of or contribution to a
party with respect to a liability where such indemnification
or contribution is contrary to public policy; (iv) such
counsel need not express an opinion concerning the
enforceability of the waiver of rights or defenses contained
in Section 4.4 of the
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Indenture and (v) such counsel need not express an opinion
with respect to Sections 10.15 and 10.16 of the Indenture.
(d) Michael C. Ross, Senior Vice President, General Counsel
and Secretary of the Company, shall have furnished to you his written
opinion, dated the Closing Date, in form and substance satisfactory to
you, to the effect that:
(i) the Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each jurisdiction in which its
ownership or lease of substantial properties or the conduct of
its business require such qualification, and in which the
failure to be so qualified and in good standing would have a
material adverse effect upon the Company and its subsidiaries
considered as a whole;
(ii) based solely on certificates from public
officials, each Significant Subsidiary of the Company has been
duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of
incorporation; has corporate power and authority to own, lease
and operate its properties and conduct its business as
described in the Prospectus; to the best of his knowledge has
been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws
of each other jurisdiction in which its ownership or lease of
substantial properties or the conduct of its business require
such qualification, and in which failure to be so qualified
and in good standing would have a material adverse effect upon
the Company and its subsidiaries considered as a whole; and
all of the issued and outstanding capital stock of each such
Significant Subsidiary has been duly authorized and validly
issued and is fully paid and nonassessable, and the capital
stock owned by the Company in such subsidiary is owned by the
Company free and clear of any mortgage, pledge, lien,
encumbrance, claim or equity;
(iii) to the best of such counsel's knowledge there
are no legal or governmental proceedings pending or threatened
to which the Company or any of its subsidiaries is a party or
of which any property of the Company or any of its
subsidiaries is the subject, required to be described in the
Prospectus, which are not described as required; and
(iv) the issue and sale of the Securities being
delivered at the Closing Date by the Company and the
application of the net proceeds therefrom as contemplated
under "Use of Proceeds" in the Prospectus, and the compliance
by the Company with all of the provisions of this Agreement
will not conflict with or result in a material breach or
violation of any of the terms or provisions of, or constitute
a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument relating to
indebtedness in excess of $25 million to which the Company or
any of its subsidiaries is a party or by which the Company or
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any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries
is subject.
(e) The Underwriters shall have received on the Closing Date
an opinion of Brown & Wood llp, counsel for the Underwriters, dated the
Closing Date, covering the matters referred to in subparagraphs (ii),
(iii), (iv), (viii) (but only as to the statements in the Prospectus
under "Description of Securities") and the penultimate paragraph of
paragraph (c) above.
The opinion of Latham & Watkins described in paragraph (c)
above shall be rendered to the Underwriters at the request of the
Company and shall so state therein.
(f) The Underwriters shall have received, on each of the date
hereof and the Closing Date, a letter dated the date hereof or the
Closing Date, as the case may be, in form and substance satisfactory to
the Underwriters, from Deloitte & Touche LLP, independent public
accountants, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters
with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
provided that the letter delivered on the Closing Date shall use a
"cut-off date" not earlier than the date hereof.
(g) At the date of this Agreement, the Company shall have
furnished for review by the Underwriters copies of such further
information, certificates and documents as they may reasonably request.
6. COVENANTS OF THE COMPANY. In further consideration of the
agreements of the Underwriters herein contained, the Company covenants with each
Underwriter as follows:
(a) To furnish to you, without charge, a signed copy of the
Registration Statement (including exhibits thereto) and documents
incorporated by reference and to each Underwriter a copy of the
Registration Statement (without exhibits thereto but including
documents incorporated by reference) and to furnish to you in New York
City without charge prior to 5:00 p.m. local time on the business day
next succeeding the date of this Agreement, and during the period
mentioned in paragraph (c) below, as many copies of the Prospectus, any
documents incorporated therein by reference, and any supplements and
amendments thereto or to the Registration Statement as you may
reasonably request. The terms "supplement" and "amendment" or "amend"
as used in this Agreement shall include all documents subsequently
filed by the Company with the Commission pursuant to the Exchange Act
that are deemed to be incorporated by reference in the Prospectus.
(b) Before amending or supplementing the Registration
Statement or the Prospectus, to furnish to you a copy of each such
proposed amendment or supplement and not to file any such proposed
amendment or supplement to which
10
<PAGE> 12
you reasonably object, and to file with the Commission within the
applicable period specified in Rule 424(b) under the Securities Act any
prospectus required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public
offering of the Securities as in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered in
connection with sales by an Underwriter or dealer, any event shall
occur or condition exist as a result of which it is necessary to amend
or supplement the Prospectus in order to make the statements therein,
in the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if, in the opinion of counsel for the
Underwriters, it is necessary to amend or supplement the Prospectus to
comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to
the dealers (whose names and addresses you will furnish to the Company)
to which Securities may have been sold by you on behalf of the
Underwriters and to any other dealers upon request, either amendments
or supplements to the Prospectus so that the statements in the
Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be
misleading or so that the Prospectus, as amended or supplemented, will
comply with law.
(d) To endeavor to qualify the Securities for offer and sale
under the securities or Blue Sky laws of such jurisdictions as you
shall reasonably request.
(e) To make generally available to the Company's security
holders and to you as soon as practicable an earnings statement that
satisfies the provisions of Section 11(a) of the Securities Act and the
rules and regulations of the Commission thereunder.
(f) During the period beginning on the date hereof and
continuing to and including the Closing Date, not to offer, sell,
contract to sell or otherwise dispose of any debt securities of the
Company or warrants to purchase debt securities of the Company
substantially similar to the Securities (other than (i) the Securities
or (ii) commercial paper issued in the ordinary course of business),
without the prior written consent of Morgan Stanley & Co. Incorporated.
(g) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay all
expenses incident to the performance of its obligations under this
Agreement, including: (i) the preparation and filing of the
Registration Statement and the Prospectus and all amendments and
supplements thereto; (ii) the preparation, issuance and delivery of the
Securities; (iii) the fees and disbursements of the Company's counsel
and accountants and of the Trustee and its counsel; (iv) the
qualification of the Securities under state securities or Blue Sky laws
in accordance with the provisions of Section 6(d), including filing
fees and the fees and disbursements of counsel for the Underwriters in
connection therewith and in connection with the preparation of any Blue
Sky Memoranda; (v) the printing and delivery to the Underwriters in
quantities as hereinabove stated of copies of the Registration
11
<PAGE> 13
Statement and all amendments thereto and of each preliminary prospectus
and the Prospectus and any amendments or supplements thereto; (vi) the
printing and delivery to the Underwriters of copies of any Blue Sky
Memoranda; (vii) any fees charged by rating agencies for the rating of
the Securities; (ix) any expenses incurred by the Company in connection
with a "road show" presentation to potential investors and (x) the cost
of printing certificates representing the Securities. It is understood,
however, that except as provided in this Section, Section 7 entitled
"Indemnity and Contribution", and the last paragraph of Section 9
below, the Underwriters will pay all of their costs and expenses,
including fees and disbursements of their counsel, stock transfer taxes
payable on resale of any of the Securities by them, the costs and
expenses of the Underwriters relating to investor presentations on any
"road shows" undertaken in connection with the marketing of the Shares
and any advertising expenses connected with any offers they may make.
7. INDEMNITY AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages
and liabilities (including, without limitation, any legal or other
expenses reasonably incurred by any Underwriter or any such controlling
person in connection with defending or investigating any such action or
claim) caused by any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto), or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar
as such losses, claims, damages or liabilities are caused by any such
untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Underwriter furnished to the
Company in writing by such Underwriter through you expressly for use
therein; provided, however, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of
any Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased Securities, or any person controlling
such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Securities to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such losses,
claims, damages or liabilities.
(b) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers
who sign the Registration Statement and each person, if any, who
controls the Company within
12
<PAGE> 14
the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the
Company to such Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company in writing by
such Underwriter through you expressly for use in the Registration
Statement, any preliminary prospectus, the Prospectus or any amendments
or supplements thereto.
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of
which indemnity may be sought pursuant to either paragraph (a) or (b)
of this Section 7, such person (the "indemnified party") shall promptly
notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably
satisfactory to the indemnified party to represent the indemnified
party and any others the indemnifying party may designate in such
proceeding and shall pay the fees and disbursements of such counsel
related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the indemnifying party and the indemnified party shall
have mutually agreed to the retention of such counsel or (ii) the named
parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be
inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in
respect of the legal expenses of any indemnified party in connection
with any proceeding or related proceedings in the same jurisdiction, be
liable for the fees and expenses of more than one separate firm (in
addition to any local counsel) for all such indemnified parties and
that all such fees and expenses shall be reimbursed as they are
incurred. Such firm shall be designated in writing by Morgan Stanley &
Co. Incorporated, in the case of parties indemnified pursuant to
paragraph (a) above and by the Company, in the case of parties
indemnified pursuant to paragraph (b) above. The indemnifying party
shall not be liable for any settlement of any proceeding effected
without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party
agrees to indemnify the indemnified party from and against any loss or
liability by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without
its written consent if (i) such settlement is entered into more than 30
days after receipt by such indemnifying party of the aforesaid request
and (ii) such indemnifying party shall not have reimbursed the
indemnified party in accordance with such request prior to the date of
such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending
or threatened proceeding in respect of which any indemnified party is
or could have been a party and
13
<PAGE> 15
indemnity could have been sought hereunder by such indemnified party,
unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject
matter of such proceeding.
(d) To the extent the indemnification provided for in
paragraph (a) or (b) of this Section 7 is unavailable to an indemnified
party or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each indemnifying party under
such paragraph, in lieu of indemnifying such indemnified party
thereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the
relative fault of the Company on the one hand and of the Underwriters
on the other hand in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities, as well as any
other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Underwriters on the other hand
in connection with the offering of the Securities shall be deemed to be
in the same respective proportions as the net proceeds from the
offering of the Securities (before deducting expenses) received by the
Company and the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the
cover of the Prospectus, bear to the aggregate Public Offering Price of
the Securities. The relative fault of the Company on the one hand and
the Underwriters on the other hand shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material
fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Underwriters' respective obligations to contribute
pursuant to this Section 7 are several in proportion to the respective
principal amounts of Securities they have purchased hereunder, and not
joint.
(e) The Company and the Underwriters agree that it would not
be just or equitable if contribution pursuant to this Section 7 were
determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of
allocation that does not take account of the equitable considerations
referred to in paragraph (d) of this Section 7. The amount paid or
payable by an indemnified party as a result of the losses, claims,
damages and liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section 7,
no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Securities
underwritten by it and distributed to the public were offered to the
public exceeds the amount of any
14
<PAGE> 16
damages that such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The remedies provided for in this Section
7 are not exclusive and shall not limit any rights or remedies which
may otherwise be available to any indemnified party at law or in
equity.
(f) The indemnity and contribution provisions contained in
this Section 7 and the representations, warranties and other statements
of the Company contained in this Agreement shall remain operative and
in full force and effect regardless of (i) any termination of this
Agreement, (ii) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter or by or on
behalf of the Company, its officers or directors or any person
controlling the Company and (iii) acceptance of and payment for any of
the Securities.
8. TERMINATION. This Agreement shall be subject to termination
by notice given by you to the Company, if (a) after the execution and delivery
of this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, either of the
New York Stock Exchange or the National Association of Securities Dealers, Inc.,
(ii) trading of any securities of the Company shall have been suspended on any
exchange or in any over-the-counter market, (iii) a general moratorium on
commercial banking activities in New York or California shall have been declared
by either Federal or New York State or California authorities or (iv) there
shall have occurred any outbreak or escalation of hostilities or any calamity or
crisis, including any calamity or crisis in the financial markets, that, in your
judgment, is material and adverse and (b) in the case of any of the events
specified in clauses (a)(i) through (iv), such event, singly or together with
any other such event, makes it, in your judgment, impracticable to market the
Securities on the terms and in the manner contemplated in the Prospectus.
9. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement
shall become effective upon the execution and delivery hereof by the parties
hereto.
If, on the Closing Date, any one or more of the Underwriters
shall fail or refuse to purchase Securities that it has or they have agreed to
purchase hereunder on such date, and the aggregate principal amount of
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of the Securities to be purchased on such date, the other Underwriters
shall be obligated severally in the proportions that the principal amount of
Securities set forth opposite their respective names in Schedule I bears to the
principal amount of Securities set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as you may specify, to
purchase the Securities which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase on such date; provided that in no event shall
the principal amount of Securities that any Underwriter has agreed to purchase
pursuant to this Agreement be increased pursuant to this Section 9 by an amount
in excess of one-ninth of
15
<PAGE> 17
such principal amount of Securities without the written consent of such
Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall fail
or refuse to purchase Securities and the aggregate principal amount of
Securities with respect to which such default occurs is more than one-tenth of
the aggregate principal amount of Securities to be purchased on such date, and
arrangements satisfactory to you and the Company for the purchase of such
Securities are not made within 36 hours after such default, this Agreement shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company. In any such case either you or the Company shall have the right to
postpone the Closing Date, but in no event for longer than seven days, in order
that the required changes, if any, in the Registration Statement and in the
Prospectus or in any other documents or arrangements may be effected. Any action
taken under this paragraph shall not relieve any defaulting Underwriter from
liability in respect of any default of such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or
any of them, because of any failure or refusal on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company shall be unable to perform its obligations under
this Agreement, the Company will reimburse the Underwriters or such Underwriters
as have so terminated this Agreement with respect to themselves, severally, for
all out-of-pocket expenses (including the fees and disbursements of their
counsel) reasonably incurred by such Underwriters in connection with this
Agreement or the offering contemplated hereunder; provided, however, that no
such reimbursement shall be required with respect to a termination of this
Agreement by the Underwriters pursuant to Section 8 or this Section 9.
10. COUNTERPARTS. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
11. APPLICABLE LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York.
16
<PAGE> 18
12. HEADINGS. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be deemed a
part of this Agreement.
Very truly yours,
SAFEWAY INC.
By: /s/ MELISSA C. PLAISANCE
-------------------------
Name: Melissa C. Plaisance
Title: Senior Vice President
Accepted as of the date hereof
Morgan Stanley & Co. Incorporated
BT Alex. Brown Incorporated
Chase Securities Inc.
Lehman Brothers Inc.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Smith Barney Inc.
First Chicago Capital Markets, Inc.
Scotia Capital Markets (USA) Inc.
Acting severally on behalf of themselves and the several Underwriters named
herein.
By: Morgan Stanley & Co. Incorporated
By: /s/ HAROLD J. HENDERSHOT III
------------------------------
Name: Harold J. Hendershot III
Title: Vice President
17
<PAGE> 19
SCHEDULE I
<TABLE>
<CAPTION>
Principal Amount Principal Amount Principal Amount Principal Amount
of Notes Due 2000 of Notes Due 2001 of Notes Due 2003 of Notes Due 2008
Underwriter to Be Purchased to Be Purchased to Be Purchased to Be Purchased
----------- --------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Morgan Stanley & Co. Incorporated $180,000,000 $180,000,000 $157,500,000 $112,500,000
BT Alex. Brown Incorporated 36,000,000 36,000,000 31,500,000 22,500,000
Chase Securities Inc. 36,000,000 36,000,000 31,500,000 22,500,000
Lehman Brothers Inc. 36,000,000 36,000,000 31,500,000 22,500,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated 36,000,000 36,000,000 31,500,000 22,500,000
Salomon Smith Barney Inc. 36,000,000 36,000,000 31,500,000 22,500,000
First Chicago Capital Markets, Inc. 20,000,000 20,000,000 17,500,000 12,500,000
Scotia Capital Markets (USA) Inc. 20,000,000 20,000,000 17,500,000 12,500,000
------------ ------------ ------------ ------------
Total $400,000,000 $400,000,000 $350,000,000 $250,000,000
============ ============ ============ ============
</TABLE>
<PAGE> 1
EXHIBIT 4.2
SAFEWAY INC.
OFFICERS' CERTIFICATE PURSUANT TO
SECTIONS 2.2 AND 10.4 OF THE INDENTURE
David Weed and Melissa C. Plaisance do hereby certify that
they are the Executive Vice President and Chief Financial Officer, and the
Senior Vice President - Finance and Public Affairs, respectively, of Safeway
Inc., a Delaware corporation (the "Company") and do further certify, pursuant to
resolutions of the Board of Directors of the Company adopted on October 19, 1998
(the "Resolutions"), and in accordance with Sections 2.2 and 10.4 of the
Indenture (the "Indenture") dated as of September 10, 1997 between the Company
and The Bank of New York, as trustee (the "Trustee"), as follows:
1. Attached hereto as Annex A is a true and correct copy of a
specimen note (the "Form of 2-Year Note") representing the Company's 5
3/4% Notes Due 2000 (the "2-Year Notes"); attached hereto as Annex B is
a true and correct copy of a specimen note (the "Form of 3-Year Note")
representing the Company's 5 7/8% Notes Due 2001 (the "3-Year
Notes"); attached hereto as Annex C is a true and correct copy of a
specimen note (the "Form of 5-Year Note") representing the Company's
6.05% Notes Due 2003 (the "5-Year Notes"); and attached here to as
Annex D is a true and correct copy of a specimen note (the "Form of
10-Year Note") representing the Company's 6 1/2% Notes Due 2008 (the
"10-Year Notes"). The Form of 2-Year Note, the Form of 3-Year Note, the
Form of 5-Year Note and the Form of 10-Year Note are herein
collectively referred to as the "Forms of Notes." Each of the 2-Year
Notes, the 3-Year Notes, the 5-Year Notes and the 10-Year Notes are a
separate series of Securities under the Indenture and are referred to
herein collectively as the "Notes."
2. The Forms of Notes set forth certain of the terms required
to be set forth in this certificate pursuant to Section 2.2 of the
Indenture, and said terms are incorporated herein by reference. The
2-Year Notes were issued at the initial public offering price of
99.774% of principal amount, the 3-Year Notes were issued at the
initial public offering price of 99.713% of principal amount, the
5-Year Notes were issued at the initial public offering price of
99.828% of principal amount and the 10-Year Notes were issued at the
initial public offering price of 99.708% of principal amount.
3. In addition to the covenants set forth in Article IV of the
Indenture, each of the 2-Year Notes, the 3-Year Notes, the 5-Year Notes
and the 10-Year Notes shall include the following additional covenants,
and such additional covenants shall be subject to covenant defeasance
pursuant to Section 8.4 of the Indenture:
"Section 4.7 Limitation on Liens.
The Company shall not, nor shall it permit any of its
Subsidiaries to, create, incur, or permit to exist, any Lien on any of
their respective properties or assets, whether now owned or hereafter
acquired, or upon any income or profits therefrom, in order to secure
any Indebtedness of the Company, without effectively providing that
each series of Notes shall be equally and ratably secured until such
time as such Indebtedness is no longer secured by such Lien, except:
(i) Liens existing as of November 9, 1998 (the "Closing Date"); (ii)
Liens granted after the Closing Date on any assets or properties of the
Company or any of its Subsidiaries securing Indebtedness of the Company
created in favor of the Holders of Notes of such series; (iii) Liens
securing Indebtedness of the Company which is incurred to extend, renew
or refinance
<PAGE> 2
Indebtedness which is secured by Liens permitted to be incurred under
the Indenture; provided that such Liens do not extend to or cover any
property or assets of the Company or any of its Subsidiaries other than
the property or assets securing the Indebtedness being refinanced and
that the principal amount of such Indebtedness does not exceed the
principal amount of the Indebtedness being refinanced; (iv) Permitted
Liens; and (v) Liens created in substitution of or as replacements for
any Liens permitted by the preceding clauses (i) through (iv), provided
that, based on a good faith determination of an officer of the Company,
the property or asset encumbered under any such substitute or
replacement Lien is substantially similar in nature to the property or
asset encumbered by the otherwise permitted Lien which is being
replaced.
Notwithstanding the foregoing, the Company and any Subsidiary
of the Company may, without securing any series of Notes, create, incur
or permit to exist Liens which would otherwise be subject to the
restrictions set forth in the preceding paragraph, if after giving
effect thereto and at the time of determination, Exempted Debt does not
exceed the greater of (i) 10% of Consolidated Net Tangible Assets or
(ii) $350,000,000.
Section 4.8 Limitation on Sale and Lease-Back Transactions.
The Company shall not, nor shall it permit any of its
Subsidiaries to, enter into any sale and lease-back transaction for the
sale and leasing back of any property or asset, whether now owned or
hereafter acquired, of the Company or any of its Subsidiaries (except
such transactions (i) entered into prior to the Closing Date or (ii)
for the sale and leasing back of any property or asset by a Subsidiary
of the Company to the Company or (iii) involving leases for less than
three years or (iv) in which the lease for the property or asset is
entered into within 120 days after the later of the date of
acquisition, completion of construction or commencement of full
operations of such property or asset) unless (a) the Company or such
Subsidiary would be entitled under Section 4.7 to create, incur or
permit to exist a Lien on the assets to be leased in an amount at least
equal to the Attributable Liens in respect of such transaction without
equally and ratably securing the Notes of any series or (b) the
proceeds of the sale of the assets to be leased are at least equal to
their fair market value and the proceeds are applied to the purchase or
acquisition (or in the case of real property, the construction) of
assets or to the repayment of Indebtedness of the Company or a
Subsidiary of the Company which by its terms matures not earlier than
one year after the date of such repayment."
4. In addition to the Events of Default set forth in Section
6.1 of the Indenture, each of the 2-Year Notes, the 3-Year Notes, the
5-Year Notes and the 10-Year Notes shall include the following
additional Event of Default, which shall be deemed an Event of Default
under Section 6.1(g) of the Indenture:
"acceleration of $150,000,000 or more, individually or in the
aggregate, in principal amount of Indebtedness of the Company under the
terms of the instrument under which such Indebtedness is issued or
secured, except as a result of compliance with applicable laws, orders
or decrees, if such Indebtedness shall not have been discharged or such
acceleration is not annulled within 10 days after written notice."
5. In addition to the definitions set forth in Article I of
the Indenture, each of the 2-Year Notes, the 3-Year Notes, the 5-Year
Notes and 10-Year Notes shall include the following additional
definitions, which, in the event of a conflict with the definition of
terms in the Indenture, shall control:
2
<PAGE> 3
"Attributable Liens" means in connection with a sale and
lease-back transaction the lesser of (a) the fair market value of the
assets subject to such transaction and (b) the present value
(discounted at a rate per annum equal to the average interest borne by
all outstanding Securities issued under this Indenture determined on a
weighted average basis and compounded semi-annually) of the obligations
of the lessee for rental payments during the term of the related lease.
"Bank Credit Agreement" means the Credit Agreement dated as of
April 8, 1997 among the Company, The Vons Companies, Inc. and Canada
Safeway Limited, as borrowers, Bankers Trust Company, as administrative
agent, The Chase Manhattan Bank, as syndication agent, The Bank of Nova
Scotia and Bank of America National Trust and Savings Association, as
documentation agents, and the other lenders which are parties thereto,
as such agreement may be amended (including any amendment, restatement
and successors thereof), supplemented or otherwise modified from time
to time, including any increase in the principal amount of the
obligations thereunder.
"Capital Lease" means any Indebtedness represented by a lease
obligation of a person incurred with respect to real property or
equipment acquired or leased by such person and used in its business
that is required to be recorded as a capital lease in accordance with
GAAP.
"Consolidated Net Tangible Assets" means the total amount of
assets of the Company and its Subsidiaries (less applicable
depreciation, amortization and other valuation reserves) after
deducting therefrom (i) all current liabilities of the Company and its
Subsidiaries and (ii) all goodwill, trade names, trademarks, patents,
unamortized debt discount and expenses and other like intangibles,
determined on a consolidated basis in accordance with GAAP.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement
designed to protect the Company or any of its Subsidiaries against
fluctuations in currency values.
"Exempted Debt" means the sum of the following as of the date
of determination: (i) Indebtedness of the Company incurred after the
Closing Date and secured by Liens not otherwise permitted by the first
sentence under Section 4.7, and (ii) Attributable Liens of the Company
and its Subsidiaries in respect of sale and lease-back transactions
entered into after the Closing Date, other than sale and lease-back
transactions permitted by the limitation on sale and lease-back
transactions set forth under Section 4.8. For purposes of determining
whether or not a sale and lease-back transaction is "permitted" by
Section 4.8, the last paragraph under Section 4.7 (creating an
exception for Exempted Debt) will be disregarded.
"Indebtedness" of any person means, without duplication, any
indebtedness, whether or not contingent, in respect of borrowed money
or evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements with respect thereto) or
representing the balance deferred and unpaid of the purchase price of
any property (including pursuant to Capital Leases), except any such
balance that constitutes an accrued expense or trade payable, if and to
the extent any of the foregoing indebtedness would appear as a
liability upon a balance sheet of such person prepared on a
consolidated basis in accordance with GAAP (but does not include
contingent liabilities which appear only in a footnote to a balance
sheet), and shall also include, to the extent not otherwise included,
the guaranty of items which would be included within this definition.
3
<PAGE> 4
"Interest Swap Obligations" means the obligations of any
person pursuant to any interest rate swap agreement, interest rate
collar agreement or other similar agreement or arrangement designed to
protect such person or any of its Subsidiaries against fluctuations in
interest rates.
"Joint Venture" means a joint venture, partnership or other
similar arrangement, whether in corporate, partnership or other legal
form; provided that, as to any such arrangement in corporate form, such
corporation shall not, as to any person of which such corporation is a
Subsidiary, be considered to be a Joint Venture to which such person is
a party.
"Lien" means any lien, security interest, charge or
encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement
to give any security interest).
"Permitted Liens" means (i) Liens securing Indebtedness of the
Company under the Bank Credit Agreement and any initial or subsequent
renewal, extension, refinancing, replacement or refunding thereof; (ii)
Liens on accounts receivable, merchandise inventory, equipment, and
patents, trademarks, trade names and other intangibles, securing
Indebtedness of the Company; (iii) Liens on any asset of the Company,
any Subsidiary of the Company, or any Joint Venture to which the
Company or any of its Subsidiaries is a party, created solely to secure
obligations incurred to finance the refurbishment, improvement or
construction of such asset, which obligations are incurred no later
than 24 months after completion of such refurbishment, improvement or
construction, and all renewals, extensions, refinancings, replacements
or refundings of such obligations; (iv)(a) Liens given to secure the
payment of the purchase price incurred in connection with the
acquisition (including acquisition through merger or consolidation) of
property (including shares of stock), including Capital Lease
transactions in connection with any such acquisition, and (b) Liens
existing on property at the time of acquisition thereof or at the time
of acquisition by the Company or a Subsidiary of the Company of any
person then owning such property whether or not such existing Liens
were given to secure the payment of the purchase price of the property
to which they attach; provided that, with respect to clause (a), the
Liens shall be given within 24 months after such acquisition and shall
attach solely to the property acquired or purchased and any
improvements then or thereafter placed thereon; (v) Liens in favor of
customs and revenue authorities arising as a matter of law to secure
payment of customs duties in connection with the importation of goods;
(vi) Liens upon specific items of inventory or other goods and proceeds
of any person securing such person's obligations in respect of bankers'
acceptances issued or created for the account of such person to
facilitate the purchase, shipment or storage of such inventory or other
goods; (vii) Liens securing reimbursement obligations with respect to
letters of credit that encumber documents and other property relating
to such letters of credit and the products and proceeds thereof; (viii)
Liens on key-man life insurance policies granted to secure Indebtedness
of the Company against the cash surrender value thereof; (ix) Liens
encumbering customary initial deposits and margin deposits and other
Liens in the ordinary course of business, in each case securing
Indebtedness of the Company under Interest Swap Obligations and
Currency Agreements and forward contract, option, futures contracts,
futures options or similar agreements or arrangements designed to
protect the Company or any of its Subsidiaries from fluctuations in
interest rates, currencies or the price of commodities; (x) Liens
arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by the Company
or any of its Subsidiaries in the ordinary course of business; and (xi)
Liens in favor of the Company or any Subsidiary of the Company.
4
<PAGE> 5
6. Each of the undersigned is authorized to approve the form,
terms and conditions of the Notes pursuant to the Resolutions.
7. Attached hereto as Annex D is a true and correct copy of
the Resolutions.
8. The Notes shall be issued as Global Securities (subject to
exchange for definitive certificated Notes under the circumstances
provided in the Indenture) and The Depository Trust Company shall be
Depository for the Notes.
9. Attached hereto as Annex E are true and correct copies of
the letter addressed to the Trustee entitling the Trustee to rely on
the Opinion of Counsel attached thereto, which Opinion relates to the
Securities and complies with Section 10.4(b) of the Indenture.
10. Each of the undersigned has reviewed the provisions of the
Indenture, including the covenants and conditions precedent pertaining
to the issuance of the Notes.
11. In connection with this certificate each of the
undersigned has examined documents, corporate records and certificates
and has spoken with other officers of the Company.
12. Each of the undersigned has made such examination and
investigation as is necessary to enable the undersigned to express an
informed opinion as to whether or not the covenants and conditions
precedent of the Indenture pertaining to the issuance of the Notes have
been satisfied.
13. In our opinion all of the covenants and conditions
precedent provided for in the Indenture for the issuance of the Notes
have been satisfied.
Capitalized terms used herein that are not otherwise defined
shall have the meanings ascribed thereto in the Indenture or the Notes, as the
case may be.
5
<PAGE> 6
IN WITNESS WHEREOF, each of the undersigned officers has
executed this certificate this 9th day of November 1998.
/s/ DAVID WEED
-----------------------------------------
Name: David Weed
Title: Executive Vice President and Chief
Financial Officer
/s/ MELISSA C. PLAISANCE
-----------------------------------------
Name: Melissa C. Plaisance
Title: Senior Vice President
<PAGE> 1
EXHIBIT 4.3
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), OR A NOMINEE THEREOF. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY, BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO
A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SAFEWAY INC.
5 3/4% Note Due 2000
No. R- $
CUSIP No. 786514 AT 6
SAFEWAY INC., a Delaware corporation (the "Company," which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received promises to pay to
, or registered assigns,
the principal sum of
DOLLARS
on November 15, 2000 and to pay interest thereon from November 9, 1998, or the
most recent interest payment date to which interest has been paid or provided
for, as the case may be, payable on May 15 and November 15 of each year,
commencing May 15, 1999, at the rate of 5 3/4% per annum, until the principal
hereof is paid or made available for payment, and (to the extent that the
payment of such interest is permitted by law) to pay interest at the rate per
annum borne by this Security on any overdue principal and on any overdue
installment of interest until paid. The interest so payable, and punctually paid
or duly provided for, on any interest payment date will be paid to the person in
whose name this Security (or one or more predecessor Securities) is registered
at the close of business on the regular record date for such interest, which
shall be the May 1 or November 1 (whether or not a Business Day), as the case
may be,
<PAGE> 2
next preceding such interest payment date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such regular record date and may either be paid to the person in whose
name this Security (or one or more predecessor Securities) is registered at the
close of business on a special record date for the payment of such defaulted
interest to be fixed by the Company, notice whereof shall be given to the
Trustee and the Holders not less than 10 days prior to such special record date,
or be paid at any time in any other lawful manner. Interest on the Securities
shall be computed on the basis of a 360-day year of twelve 30-day months.
Principal of and interest on the Securities will be payable in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts, the transfer of the
Securities will be registrable, the Securities may be presented for exchange,
and notices and demands to or upon the Company in respect of this Security and
the Indenture may be served, at the office or agency of the Company maintained
for such purpose (which initially will be the Corporate Trust Office of the
Trustee located at 101 Barclay Street, Floor 21W, New York, New York 10286,
Attention: Corporate Trust Administration); provided that, unless all of the
outstanding Securities are Global Securities, the Company will at all times
maintain an office or agency for such purposes in the Borough of Manhattan, The
City of New York; and provided, further, that, except as provided in the next
sentence, payment of interest may, at the option of the Company, be made by
check mailed to the address of the person entitled thereto. If this Security is
a Global Security, the interest payable on this Security will be paid to Cede &
Co., the nominee of the Depositary, or its registered assigns as the registered
owner of this Security, by wire transfer of immediately available funds on each
of the applicable interest payment dates.
Reference is hereby made to the further provisions of this
Security which further provisions shall for all purposes have the same effect as
if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
2
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
Date: November , 1998
TRUSTEE'S CERTIFICATE SAFEWAY INC.
OF AUTHENTICATION
This is one of the 5 3/4% Notes due
November 15, 2000 described in the
within-mentioned Indenture.
THE BANK OF NEW YORK
BY BY BY
AUTHORIZED SIGNATORY ASSISTANT SENIOR VICE PRESIDENT
SECRETARY
3
<PAGE> 4
SAFEWAY INC.
5 3/4% Note Due 2000
1. General.
This Security is one of a duly authorized series of securities of the
Company issued and to be issued under an Indenture, dated as of September 10,
1997, as amended, modified or supplemented from time to time (the "Indenture"),
between the Company and The Bank of New York, as Trustee (the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities, and of the terms
upon which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof, limited (except as
otherwise provided in the Indenture) in aggregate principal amount to
$400,000,000 (herein called the "Securities"). All terms used but not defined in
this Security shall have the meanings assigned to them in the Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay principal of and interest on this Security
at the times, places and rate, and in the coin or currency, herein prescribed.
2. Indenture.
The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by the Officers' Certificate dated November 9,
1998 delivered pursuant thereto and the TIA. The Securities are subject to all
such terms, and the Securityholders are referred to the Indenture and said Act
for a statement of them.
3. Sinking Fund.
The Securities are not subject to any sinking fund and the Securities
are not subject to redemption or repurchase by the Company at the option of the
Holders.
4. Redemption.
The Securities are not redeemable prior to maturity.
5. Denominations; Transfer; Exchange.
This Security is issuable only in registered form without coupons in
minimum denominations of U.S. $1,000 and integral multiples thereof.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer, or the exchange for an equal principal
amount, of this Security is registrable with the Registrar upon surrender of
this Security for registration of transfer at the office or agency of the
Registrar.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may, subject to certain exceptions, require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
6. Persons Deemed Owners.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Holder in whose name this Security is registered as the owner thereof for
all purposes, whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
4
<PAGE> 5
7. Unclaimed Money.
The Trustee and any Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal and interest that remains
unclaimed for two years. After that, Securityholders entitled to the money must
look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person.
8. Defeasance Prior to Maturity.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Securities or (ii) certain covenants and Events of Default
with respect to the Securities, in each case upon compliance with certain
conditions set forth therein.
9. Amendment; Supplement; Waiver.
Subject to certain limitations described in the Indenture, the
Indenture permits the Company and the Trustee to enter into a supplemental
indenture with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities (including consents obtained in
connection with a tender offer or exchange offer for the Securities), for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or of any supplemental indenture or modifying
in any manner the rights of the Securityholders. Subject to certain limitations
described in the Indenture, the Holders of at least a majority in principal
amount of the outstanding Securities by notice to the Trustee (including
consents obtained in connection with a tender offer or exchange offer for the
Securities) may waive compliance by the Company with any provision of the
Indenture or the Securities. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
10. Restrictive Covenants.
The Indenture imposes certain limitations on the Company's and its
Subsidiaries' ability to create or incur certain Liens on any of their
respective properties or assets and to enter into certain sale and lease-back
transactions and on the Company's ability to engage in mergers or consolidations
or the conveyance, transfer or lease of all or substantially all of its
properties and assets. These limitations are subject to a number of important
qualifications and exceptions and reference is made to the Indenture for a
description thereof.
11. Defaults and Remedies.
If an Event of Default shall occur and be continuing, the principal of
the Securities may be declared (or, in certain cases, shall ipso facto become)
due and payable in the manner and with the effect provided in the Indenture.
12. Proceedings.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding,
judicial or otherwise, with respect to the Indenture or for the appointment of a
receiver or trustee, or for any other remedy under the Indenture, unless such
Holder shall have previously given the Trustee written notice of a continuing
Event of Default with respect to the Securities and unless also the Holders of
at least a majority in principal amount of the Securities at the time
outstanding shall have made written request, and offered reasonable indemnity,
to the Trustee to institute such proceedings as trustee, and the Trustee shall
not have received from the Holders of a majority in principal amount of
Securities at the time outstanding a direction inconsistent with such request,
and shall have failed to institute such proceeding, within 60 days. The
foregoing shall not apply
5
<PAGE> 6
to any suit instituted by the Holder of this Security for the enforcement of any
payment of the principal hereof or any interest hereon on or after the
respective due dates expressed herein.
13. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may deal with the Company or an Affiliate of the Company with the same
rights it would have if it were not Trustee.
14. No Recourse Against Others.
A past, present or future director, officer, employee, shareholder or
incorporator, as such, of the Company or any successor corporation shall not
have any liability for any obligations of the Company under this Security or the
Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration of issuance of the Securities.
15. Governing Law.
The internal laws of the State of New York shall govern the Indenture
and the Securities.
6
<PAGE> 7
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ Custodian _____
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_____________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
----------------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
| |
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
________________________________________________________________________________
this Security and all rights thereunder hereby irrevocably constituting and
appointing
____________________________________________________________________, Attorney,
to transfer this Security on the books of the Trustee, with full power of
substitution in the premises.
Dated:_____________________ _______________________________________
____________________________________________
Notice: The signature(s) on this Assignment
must correspond with the name(s) as written
upon the face of this Security in every
particular, without alteration or
enlargement or any change whatsoever.
7
<PAGE> 1
EXHIBIT 4.4
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), OR A NOMINEE THEREOF. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY, BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO
A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SAFEWAY INC.
5 7/8% Note Due 2001
No. R- $
CUSIP No. 786514 AU 3
SAFEWAY INC., a Delaware corporation (the "Company," which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received promises to pay to
, or registered assigns,
the principal sum of
DOLLARS
on November 15, 2001 and to pay interest thereon from November 9, 1998, or the
most recent interest payment date to which interest has been paid or provided
for, as the case may be, payable on May 15 and November 15 of each year,
commencing May 15, 1999, at the rate of 5 7/8% per annum, until the principal
hereof is paid or made available for payment, and (to the extent that the
payment of such interest is permitted by law) to pay interest at the rate per
annum borne by this Security on any overdue principal and on any overdue
installment of interest until paid. The interest so payable, and punctually paid
or duly provided for, on any interest payment date will be paid to the person in
whose name this Security (or one or more predecessor Securities) is registered
at the close of business on the regular record date for such interest, which
shall be the May 1 or November 1 (whether or not a Business Day), as the case
may be,
1
<PAGE> 2
next preceding such interest payment date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be payable to the
Holder on such regular record date and may either be paid to the person in whose
name this Security (or one or more predecessor Securities) is registered at the
close of business on a special record date for the payment of such defaulted
interest to be fixed by the Company, notice whereof shall be given to the
Trustee and the Holders not less than 10 days prior to such special record date,
or be paid at any time in any other lawful manner. Interest on the Securities
shall be computed on the basis of a 360-day year of twelve 30-day months.
Principal of and interest on the Securities will be payable in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts, the transfer of the
Securities will be registrable, the Securities may be presented for exchange,
and notices and demands to or upon the Company in respect of this Security and
the Indenture may be served, at the office or agency of the Company maintained
for such purpose (which initially will be the Corporate Trust Office of the
Trustee located at 101 Barclay Street, Floor 21W, New York, New York 10286,
Attention: Corporate Trust Administration); provided that, unless all of the
outstanding Securities are Global Securities, the Company will at all times
maintain an office or agency for such purposes in the Borough of Manhattan, The
City of New York; and provided, further, that, except as provided in the next
sentence, payment of interest may, at the option of the Company, be made by
check mailed to the address of the person entitled thereto. If this Security is
a Global Security, the interest payable on this Security will be paid to Cede &
Co., the nominee of the Depositary, or its registered assigns as the registered
owner of this Security, by wire transfer of immediately available funds on each
of the applicable interest payment dates.
Reference is hereby made to the further provisions of this
Security which further provisions shall for all purposes have the same effect as
if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
2
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
Date: November , 1998
TRUSTEE'S CERTIFICATE SAFEWAY INC.
OF AUTHENTICATION
This is one of the 5 7/8% Notes due
November 15, 2001 described in the
within-mentioned Indenture.
THE BANK OF NEW YORK
BY BY BY
AUTHORIZED SIGNATORY ASSISTANT SENIOR VICE PRESIDENT
SECRETARY
3
<PAGE> 4
SAFEWAY INC.
5 7/8% Note Due 2001
1. General.
This Security is one of a duly authorized series of securities of the
Company issued and to be issued under an Indenture, dated as of September 10,
1997, as amended, modified or supplemented from time to time (the "Indenture"),
between the Company and The Bank of New York, as Trustee (the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities, and of the terms
upon which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof, limited (except as
otherwise provided in the Indenture) in aggregate principal amount to
$400,000,000 (herein called the "Securities"). All terms used but not defined in
this Security shall have the meanings assigned to them in the Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay principal of and interest on this Security
at the times, places and rate, and in the coin or currency, herein prescribed.
2. Indenture.
The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by the Officers' Certificate dated November 9,
1998 delivered pursuant thereto and the TIA. The Securities are subject to all
such terms, and the Securityholders are referred to the Indenture and said Act
for a statement of them.
3. Sinking Fund.
The Securities are not subject to any sinking fund and the Securities
are not subject to redemption or repurchase by the Company at the option of the
Holders.
4. Redemption.
The Securities are not redeemable prior to maturity.
5. Denominations; Transfer; Exchange.
This Security is issuable only in registered form without coupons in
minimum denominations of U.S. $1,000 and integral multiples thereof.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer, or the exchange for an equal principal
amount, of this Security is registrable with the Registrar upon surrender of
this Security for registration of transfer at the office or agency of the
Registrar.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may, subject to certain exceptions, require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
6. Persons Deemed Owners.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Holder in whose name this Security is registered as the owner thereof for
all purposes, whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
4
<PAGE> 5
7. Unclaimed Money.
The Trustee and any Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal and interest that remains
unclaimed for two years. After that, Securityholders entitled to the money must
look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person.
8. Defeasance Prior to Maturity.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Securities or (ii) certain covenants and Events of Default
with respect to the Securities, in each case upon compliance with certain
conditions set forth therein.
9. Amendment; Supplement; Waiver.
Subject to certain limitations described in the Indenture, the
Indenture permits the Company and the Trustee to enter into a supplemental
indenture with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities (including consents obtained in
connection with a tender offer or exchange offer for the Securities), for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or of any supplemental indenture or modifying
in any manner the rights of the Securityholders. Subject to certain limitations
described in the Indenture, the Holders of at least a majority in principal
amount of the outstanding Securities by notice to the Trustee (including
consents obtained in connection with a tender offer or exchange offer for the
Securities) may waive compliance by the Company with any provision of the
Indenture or the Securities. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
10. Restrictive Covenants.
The Indenture imposes certain limitations on the Company's and its
Subsidiaries' ability to create or incur certain Liens on any of their
respective properties or assets and to enter into certain sale and lease-back
transactions and on the Company's ability to engage in mergers or consolidations
or the conveyance, transfer or lease of all or substantially all of its
properties and assets. These limitations are subject to a number of important
qualifications and exceptions and reference is made to the Indenture for a
description thereof.
11. Defaults and Remedies.
If an Event of Default shall occur and be continuing, the principal of
the Securities may be declared (or, in certain cases, shall ipso facto become)
due and payable in the manner and with the effect provided in the Indenture.
12. Proceedings.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding,
judicial or otherwise, with respect to the Indenture or for the appointment of a
receiver or trustee, or for any other remedy under the Indenture, unless such
Holder shall have previously given the Trustee written notice of a continuing
Event of Default with respect to the Securities and unless also the Holders of
at least a majority in principal amount of the Securities at the time
outstanding shall have made written request, and offered reasonable indemnity,
to the Trustee to institute such proceedings as trustee, and the Trustee shall
not have received from the Holders of a majority in principal amount of
Securities at the time outstanding a direction inconsistent with such request,
and shall have failed to institute such proceeding, within 60 days. The
foregoing shall not apply
5
<PAGE> 6
to any suit instituted by the Holder of this Security for the enforcement of any
payment of the principal hereof or any interest hereon on or after the
respective due dates expressed herein.
13. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may deal with the Company or an Affiliate of the Company with the same
rights it would have if it were not Trustee.
14. No Recourse Against Others.
A past, present or future director, officer, employee, shareholder or
incorporator, as such, of the Company or any successor corporation shall not
have any liability for any obligations of the Company under this Security or the
Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration of issuance of the Securities.
15. Governing Law.
The internal laws of the State of New York shall govern the Indenture
and the Securities.
6
<PAGE> 7
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ Custodian _____
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_____________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
----------------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
| |
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
________________________________________________________________________________
this Security and all rights thereunder hereby irrevocably constituting and
appointing
____________________________________________________________________, Attorney,
to transfer this Security on the books of the Trustee, with full power of
substitution in the premises.
Dated:_____________________ _______________________________________
____________________________________________
Notice: The signature(s) on this Assignment
must correspond with the name(s) as written
upon the face of this Security in every
particular, without alteration or
enlargement or any change whatsoever.
7
<PAGE> 1
EXHIBIT 4.5
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), OR A NOMINEE THEREOF. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY, BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO
A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SAFEWAY INC.
6.05% Note Due 2003
No. R- $
CUSIP No. 786514 AV 1
SAFEWAY INC., a Delaware corporation (the "Company," which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received promises to pay to
, or registered assigns,
the principal sum of DOLLARS
on November 15, 2003 and to pay interest thereon from November 9, 1998, or the
most recent interest payment date to which interest has been paid or provided
for, as the case may be, payable on May 15 and November 15 of each year,
commencing May 15, 1999, at the rate of 6.05% per annum, until the principal
hereof is paid or made available for payment, and (to the extent that the
payment of such interest is permitted by law) to pay interest at the rate per
annum borne by this Security on any overdue principal and on any overdue
installment of interest until paid. The interest so payable, and punctually paid
or duly provided for, on any interest payment date will be paid to the person in
whose name this Security (or one or more predecessor Securities) is registered
at the close of business on the regular record date for such interest, which
shall be the May 1 or November 1 (whether or not a Business Day), as the case
may be, next
1
<PAGE> 2
preceding such interest payment date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
regular record date and may either be paid to the person in whose name this
Security (or one or more predecessor Securities) is registered at the close of
business on a special record date for the payment of such defaulted interest to
be fixed by the Company, notice whereof shall be given to the Trustee and the
Holders not less than 10 days prior to such special record date, or be paid at
any time in any other lawful manner. Interest on the Securities shall be
computed on the basis of a 360-day year of twelve 30-day months.
Principal of and interest on the Securities will be payable in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts, the transfer of the
Securities will be registrable, the Securities may be presented for exchange,
and notices and demands to or upon the Company in respect of this Security and
the Indenture may be served, at the office or agency of the Company maintained
for such purpose (which initially will be the Corporate Trust Office of the
Trustee located at 101 Barclay Street, Floor 21W, New York, New York 10286,
Attention: Corporate Trust Administration); provided that, unless all of the
outstanding Securities are Global Securities, the Company will at all times
maintain an office or agency for such purposes in the Borough of Manhattan, The
City of New York; and provided, further, that, except as provided in the next
sentence, payment of interest may, at the option of the Company, be made by
check mailed to the address of the person entitled thereto. If this Security is
a Global Security, the interest payable on this Security will be paid to Cede &
Co., the nominee of the Depositary, or its registered assigns as the registered
owner of this Security, by wire transfer of immediately available funds on each
of the applicable interest payment dates.
Reference is hereby made to the further provisions of this
Security which further provisions shall for all purposes have the same effect as
if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
2
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
Date: November , 1998
TRUSTEE'S CERTIFICATE SAFEWAY INC.
OF AUTHENTICATION
This is one of the 6.05% Notes due
November 15, 2003 described in the
within-mentioned Indenture.
THE BANK OF NEW YORK
BY BY BY
AUTHORIZED SIGNATORY ASSISTANT SENIOR VICE PRESIDENT
SECRETARY
3
<PAGE> 4
SAFEWAY INC.
6.05% Note Due 2003
1. General.
This Security is one of a duly authorized series of securities of the
Company issued and to be issued under an Indenture, dated as of September 10,
1997, as amended, modified or supplemented from time to time (the "Indenture"),
between the Company and The Bank of New York, as Trustee (the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities, and of the terms
upon which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof, limited (except as
otherwise provided in the Indenture) in aggregate principal amount to
$350,000,000 (herein called the "Securities"). All terms used but not defined in
this Security shall have the meanings assigned to them in the Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay principal of and interest on this Security
at the times, places and rate, and in the coin or currency, herein prescribed.
2. Indenture.
The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by the Officers' Certificate dated November 9,
1998 delivered pursuant thereto and the TIA. The Securities are subject to all
such terms, and the Securityholders are referred to the Indenture and said Act
for a statement of them.
3. Sinking Fund.
The Securities are not subject to any sinking fund and the Securities
are not subject to redemption or repurchase by the Company at the option of the
Holders.
4. Redemption.
The Securities are redeemable, in whole or in part, at the option of
the Company at any time at a redemption price equal to the greater of (i) 100%
of the principal amount of the Securities then outstanding or (ii) as determined
by an Independent Investment Banker, the sum of the present values of the
remaining scheduled payments of principal and interest thereon (not including
any portion of such payments of interest accrued as of the date of redemption)
discounted to the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus 12.5
basis points plus, in each case, accrued and unpaid interest thereon to the date
of redemption.
"Adjusted Treasury Rate" means, with respect to any redemption date:
(i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Remaining Life, yields for the two
published maturities most closely corresponding to the Comparable Treasury Issue
shall be determined and the Adjusted Treasury Rate shall be interpolated or
extrapolated from such yields on a straight line basis, rounding to the nearest
month); or (ii) if such release (or any successor release) is not published
during the week preceding the calculation date or does not contain such yields,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date. The Adjusted Treasury Rate
shall be calculated on the third Business Day preceding the redemption date.
4
<PAGE> 5
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Securities to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such securities ("Remaining Life").
"Comparable Treasury Price" means (1) the average of five Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest Reference Treasury Dealer Quotations, or (2) if the Independent
Investment Banker obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such quotations.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with the Company.
"Reference Treasury Dealer" means (i) each of Morgan Stanley & Co.
Incorporated, BT Alex. Brown Incorporated, Chase Securities Inc., Lehman
Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Smith Barney Inc. and their respective successors; provided, however, that if
any of the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company shall
substitute therefor another Primary Treasury Dealer and (ii) any other Primary
Treasury Dealer selected by the Trustee after consultation with the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at 5:00
p.m., New York City time, on the third Business Day preceding such redemption
date.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of the Securities to be
redeemed.
5. Denominations; Transfer; Exchange.
This Security is issuable only in registered form without coupons in
minimum denominations of U.S. $1,000 and integral multiples thereof.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer, or the exchange for an equal principal
amount, of this Security is registrable with the Registrar upon surrender of
this Security for registration of transfer at the office or agency of the
Registrar.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may, subject to certain exceptions, require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
6. Persons Deemed Owners.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Holder in whose name this Security is registered as the owner thereof for
all purposes, whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
5
<PAGE> 6
7. Unclaimed Money.
The Trustee and any Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal and interest that remains
unclaimed for two years. After that, Securityholders entitled to the money must
look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person.
8. Defeasance Prior to Maturity.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Securities or (ii) certain covenants and Events of Default
with respect to the Securities, in each case upon compliance with certain
conditions set forth therein.
9. Amendment; Supplement; Waiver.
Subject to certain limitations described in the Indenture, the
Indenture permits the Company and the Trustee to enter into a supplemental
indenture with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities (including consents obtained in
connection with a tender offer or exchange offer for the Securities), for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or of any supplemental indenture or modifying
in any manner the rights of the Securityholders. Subject to certain limitations
described in the Indenture, the Holders of at least a majority in principal
amount of the outstanding Securities by notice to the Trustee (including
consents obtained in connection with a tender offer or exchange offer for the
Securities) may waive compliance by the Company with any provision of the
Indenture or the Securities. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
10. Restrictive Covenants.
The Indenture imposes certain limitations on the Company's and its
Subsidiaries' ability to create or incur certain Liens on any of their
respective properties or assets and to enter into certain sale and lease-back
transactions and on the Company's ability to engage in mergers or consolidations
or the conveyance, transfer or lease of all or substantially all of its
properties and assets. These limitations are subject to a number of important
qualifications and exceptions and reference is made to the Indenture for a
description thereof.
11. Defaults and Remedies.
If an Event of Default shall occur and be continuing, the principal of
the Securities may be declared (or, in certain cases, shall ipso facto become)
due and payable in the manner and with the effect provided in the Indenture.
12. Proceedings.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding,
judicial or otherwise, with respect to the Indenture or for the appointment of a
receiver or trustee, or for any other remedy under the Indenture, unless such
Holder shall have previously given the Trustee written notice of a continuing
Event of Default with respect to the Securities and unless also the Holders of
at least a majority in principal amount of the Securities at the time
outstanding shall have made written request, and offered reasonable indemnity,
to the Trustee to institute such proceedings as trustee, and the Trustee shall
not have received from the Holders of a majority in principal amount of
Securities at the time outstanding a direction inconsistent with such request,
and shall have failed to institute such proceeding, within 60 days. The
foregoing shall not apply to any suit instituted by the Holder of this Security
for the enforcement of any payment of the principal hereof or any interest
hereon on or after the respective due dates expressed herein.
6
<PAGE> 7
13. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may deal with the Company or an Affiliate of the Company with the same
rights it would have if it were not Trustee.
14. No Recourse Against Others.
A past, present or future director, officer, employee, shareholder or
incorporator, as such, of the Company or any successor corporation shall not
have any liability for any obligations of the Company under this Security or the
Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration of issuance of the Securities.
15. Governing Law.
The internal laws of the State of New York shall govern the Indenture
and the Securities.
7
<PAGE> 8
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ Custodian _____
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_____________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
----------------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
| |
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
________________________________________________________________________________
this Security and all rights thereunder hereby irrevocably constituting and
appointing
____________________________________________________________________, Attorney,
to transfer this Security on the books of the Trustee, with full power of
substitution in the premises.
Dated:_____________________ _______________________________________
____________________________________________
Notice: The signature(s) on this Assignment
must correspond with the name(s) as written
upon the face of this Security in every
particular, without alteration or
enlargement or any change whatsoever.
8
<PAGE> 1
EXHIBIT 4.6
THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE
HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE DEPOSITORY TRUST
COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), OR A NOMINEE THEREOF. THIS
SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A PERSON OTHER
THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE INDENTURE, AND MAY NOT BE TRANSFERRED EXCEPT AS A WHOLE BY THE DEPOSITARY
TO A NOMINEE OF THE DEPOSITARY, BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY OR BY THE DEPOSITARY OR ANY SUCH NOMINEE TO
A SUCCESSOR DEPOSITARY OR A NOMINEE OF SUCH SUCCESSOR DEPOSITARY.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR
IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER,
PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
SAFEWAY INC.
6 1/2% Note Due 2008
No. R- $
CUSIP No. 786514 AW 9
SAFEWAY INC., a Delaware corporation (the "Company," which
term includes any successor corporation under the Indenture hereinafter referred
to), for value received promises to pay to
, or registered assigns,
the principal sum of
DOLLARS
on November 15, 2008 and to pay interest thereon from November 9, 1998, or the
most recent interest payment date to which interest has been paid or provided
for, as the case may be, payable on May 15 and November 15 of each year,
commencing May 15, 1999, at the rate of 6 1/2% per annum, until the principal
hereof is paid or made available for payment, and (to the extent that the
payment of such interest is permitted by law) to pay interest at the rate per
annum borne by this Security on any overdue principal and on any overdue
installment of interest until paid. The interest so payable, and punctually paid
or duly provided for, on any interest payment date will be paid to the person in
whose name this Security (or one or more predecessor Securities) is registered
at the close of business on the regular record date for such interest, which
shall be the May 1 or November 1 (whether or not a Business Day), as the case
may be, next
1
<PAGE> 2
preceding such interest payment date. Any such interest not so punctually paid
or duly provided for will forthwith cease to be payable to the Holder on such
regular record date and may either be paid to the person in whose name this
Security (or one or more predecessor Securities) is registered at the close of
business on a special record date for the payment of such defaulted interest to
be fixed by the Company, notice whereof shall be given to the Trustee and the
Holders not less than 10 days prior to such special record date, or be paid at
any time in any other lawful manner. Interest on the Securities shall be
computed on the basis of a 360-day year of twelve 30-day months.
Principal of and interest on the Securities will be payable in
such coin or currency of the United States of America as at the time of payment
is legal tender for payment of public and private debts, the transfer of the
Securities will be registrable, the Securities may be presented for exchange,
and notices and demands to or upon the Company in respect of this Security and
the Indenture may be served, at the office or agency of the Company maintained
for such purpose (which initially will be the Corporate Trust Office of the
Trustee located at 101 Barclay Street, Floor 21W, New York, New York 10286,
Attention: Corporate Trust Administration); provided that, unless all of the
outstanding Securities are Global Securities, the Company will at all times
maintain an office or agency for such purposes in the Borough of Manhattan, The
City of New York; and provided, further, that, except as provided in the next
sentence, payment of interest may, at the option of the Company, be made by
check mailed to the address of the person entitled thereto. If this Security is
a Global Security, the interest payable on this Security will be paid to Cede &
Co., the nominee of the Depositary, or its registered assigns as the registered
owner of this Security, by wire transfer of immediately available funds on each
of the applicable interest payment dates.
Reference is hereby made to the further provisions of this
Security which further provisions shall for all purposes have the same effect as
if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee by manual signature, this Security shall not be entitled
to any benefit under the Indenture or be valid or obligatory for any purpose.
2
<PAGE> 3
IN WITNESS WHEREOF, the Company has caused this Security to be
signed manually or by facsimile by its duly authorized officers and a facsimile
of its corporate seal to be affixed hereto or imprinted hereon.
Date: November , 1998
TRUSTEE'S CERTIFICATE SAFEWAY INC.
OF AUTHENTICATION
This is one of the 6 1/2% Notes due
November 15, 2008 described in the
within-mentioned Indenture.
THE BANK OF NEW YORK
BY BY BY
AUTHORIZED SIGNATORY ASSISTANT SENIOR VICE PRESIDENT
SECRETARY
3
<PAGE> 4
SAFEWAY INC.
6 1/2% Note Due 2008
1. General.
This Security is one of a duly authorized series of securities of the
Company issued and to be issued under an Indenture, dated as of September 10,
1997, as amended, modified or supplemented from time to time (the "Indenture"),
between the Company and The Bank of New York, as Trustee (the "Trustee", which
term includes any successor trustee under the Indenture), to which Indenture and
all indentures supplemental thereto reference is hereby made for a statement of
the respective rights, limitations of rights, duties and immunities thereunder
of the Company, the Trustee and the Holders of the Securities, and of the terms
upon which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof, limited (except as
otherwise provided in the Indenture) in aggregate principal amount to
$250,000,000 (herein called the "Securities"). All terms used but not defined in
this Security shall have the meanings assigned to them in the Indenture.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay principal of and interest on this Security
at the times, places and rate, and in the coin or currency, herein prescribed.
2. Indenture.
The terms of the Securities include those stated in the Indenture and
those made part of the Indenture by the Officers' Certificate dated November 9,
1998 delivered pursuant thereto and the TIA. The Securities are subject to all
such terms, and the Securityholders are referred to the Indenture and said Act
for a statement of them.
3. Sinking Fund.
The Securities are not subject to any sinking fund and the Securities
are not subject to redemption or repurchase by the Company at the option of the
Holders.
4. Redemption.
The Securities are redeemable, in whole or in part, at the option of
the Company at any time at a redemption price equal to the greater of (i) 100%
of the principal amount of the Securities then outstanding or (ii) as determined
by an Independent Investment Banker, the sum of the present values of the
remaining scheduled payments of principal and interest thereon (not including
any portion of such payments of interest accrued as of the date of redemption)
discounted to the redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus 25 basis
points plus, in each case, accrued and unpaid interest thereon to the date of
redemption.
"Adjusted Treasury Rate" means, with respect to any redemption date:
(i) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published statistical
release designated "H.15(519)" or any successor publication which is published
weekly by the Board of Governors of the Federal Reserve System and which
establishes yields on actively traded United States Treasury securities adjusted
to constant maturity under the caption "Treasury Constant Maturities," for the
maturity corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Remaining Life, yields for the two
published maturities most closely corresponding to the Comparable Treasury Issue
shall be determined and the Adjusted Treasury Rate shall be interpolated or
extrapolated from such yields on a straight line basis, rounding to the nearest
month); or (ii) if such release (or any successor release) is not published
during the week preceding the calculation date or does not contain such yields,
the rate per annum equal to the semi-annual equivalent yield to maturity of the
Comparable Treasury Issue, calculated using a price for the Comparable Treasury
Issue (expressed as a percentage of its principal amount) equal to the
Comparable Treasury Price for such redemption date. The Adjusted Treasury Rate
shall be calculated on the third Business Day preceding the redemption date.
4
<PAGE> 5
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the Securities to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such securities ("Remaining Life").
"Comparable Treasury Price" means (1) the average of five Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest Reference Treasury Dealer Quotations, or (2) if the Independent
Investment Banker obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such quotations.
"Independent Investment Banker" means one of the Reference Treasury
Dealers appointed by the Trustee after consultation with the Company.
"Reference Treasury Dealer" means (i) each of Morgan Stanley & Co.
Incorporated, BT Alex. Brown Incorporated, Chase Securities Inc., Lehman
Brothers Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Smith Barney Inc. and their respective successors; provided, however, that if
any of the foregoing shall cease to be a primary U.S. Government securities
dealer in New York City (a "Primary Treasury Dealer"), the Company shall
substitute therefor another Primary Treasury Dealer and (ii) any other Primary
Treasury Dealer selected by the Trustee after consultation with the Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at 5:00
p.m., New York City time, on the third Business Day preceding such redemption
date.
Notice of any redemption will be mailed at least 30 days but not more
than 60 days before the redemption date to each Holder of the Securities to be
redeemed.
5. Denominations; Transfer; Exchange.
This Security is issuable only in registered form without coupons in
minimum denominations of U.S. $1,000 and integral multiples thereof.
As provided in the Indenture and subject to certain limitations therein
and herein set forth, the transfer, or the exchange for an equal principal
amount, of this Security is registrable with the Registrar upon surrender of
this Security for registration of transfer at the office or agency of the
Registrar.
No service charge shall be made for any such registration of transfer
or exchange, but the Company may, subject to certain exceptions, require payment
of a sum sufficient to cover any tax or other governmental charge payable in
connection therewith.
6. Persons Deemed Owners.
Prior to due presentment of this Security for registration of transfer,
the Company, the Trustee and any agent of the Company or the Trustee may treat
the Holder in whose name this Security is registered as the owner thereof for
all purposes, whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary.
5
<PAGE> 6
7. Unclaimed Money.
The Trustee and any Paying Agent shall pay to the Company upon request
any money held by them for the payment of principal and interest that remains
unclaimed for two years. After that, Securityholders entitled to the money must
look to the Company for payment as general creditors unless an applicable
abandoned property law designates another person.
8. Defeasance Prior to Maturity.
The Indenture contains provisions for defeasance of (i) the entire
indebtedness of the Securities or (ii) certain covenants and Events of Default
with respect to the Securities, in each case upon compliance with certain
conditions set forth therein.
9. Amendment; Supplement; Waiver.
Subject to certain limitations described in the Indenture, the
Indenture permits the Company and the Trustee to enter into a supplemental
indenture with the written consent of the Holders of at least a majority in
principal amount of the outstanding Securities (including consents obtained in
connection with a tender offer or exchange offer for the Securities), for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of the Indenture or of any supplemental indenture or modifying
in any manner the rights of the Securityholders. Subject to certain limitations
described in the Indenture, the Holders of at least a majority in principal
amount of the outstanding Securities by notice to the Trustee (including
consents obtained in connection with a tender offer or exchange offer for the
Securities) may waive compliance by the Company with any provision of the
Indenture or the Securities. Any such consent or waiver by the Holder of this
Security shall be conclusive and binding upon such Holder and upon all future
Holders of this Security and of any Security issued upon the registration of
transfer hereof or in exchange herefor or in lieu hereof, whether or not
notation of such consent or waiver is made upon this Security.
10. Restrictive Covenants.
The Indenture imposes certain limitations on the Company's and its
Subsidiaries' ability to create or incur certain Liens on any of their
respective properties or assets and to enter into certain sale and lease-back
transactions and on the Company's ability to engage in mergers or consolidations
or the conveyance, transfer or lease of all or substantially all of its
properties and assets. These limitations are subject to a number of important
qualifications and exceptions and reference is made to the Indenture for a
description thereof.
11. Defaults and Remedies.
If an Event of Default shall occur and be continuing, the principal of
the Securities may be declared (or, in certain cases, shall ipso facto become)
due and payable in the manner and with the effect provided in the Indenture.
12. Proceedings.
As provided in and subject to the provisions of the Indenture, the
Holder of this Security shall not have the right to institute any proceeding,
judicial or otherwise, with respect to the Indenture or for the appointment of a
receiver or trustee, or for any other remedy under the Indenture, unless such
Holder shall have previously given the Trustee written notice of a continuing
Event of Default with respect to the Securities and unless also the Holders of
at least a majority in principal amount of the Securities at the time
outstanding shall have made written request, and offered reasonable indemnity,
to the Trustee to institute such proceedings as trustee, and the Trustee shall
not have received from the Holders of a majority in principal amount of
Securities at the time outstanding a direction inconsistent with such request,
and shall have failed to institute such proceeding, within 60 days. The
foregoing shall not apply to any suit instituted by the Holder of this Security
for the enforcement of any payment of the principal hereof or any interest
hereon on or after the respective due dates expressed herein.
6
<PAGE> 7
13. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may deal with the Company or an Affiliate of the Company with the same
rights it would have if it were not Trustee.
14. No Recourse Against Others.
A past, present or future director, officer, employee, shareholder or
incorporator, as such, of the Company or any successor corporation shall not
have any liability for any obligations of the Company under this Security or the
Indenture or for any claim based on, in respect of, or by reason of such
obligations or their creation. Each Securityholder by accepting a Security
waives and releases all such liability. The waiver and release are part of the
consideration of issuance of the Securities.
15. Governing Law.
The internal laws of the State of New York shall govern the Indenture
and the Securities.
7
<PAGE> 8
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this Security, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ______ Custodian _____
TEN ENT - as tenants by the entireties (Cust) (Minor)
JT TEN - as joint tenants with right of under Uniform Gifts to Minors
survivorship and not as tenants Act_____________________
in common (State)
</TABLE>
Additional abbreviations may also be used though not in the above list.
----------------------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto
PLEASE INSERT SOCIAL SECURITY OR
OTHER
IDENTIFYING NUMBER OF ASSIGNEE
| |
________________________________________________________________________________
(Please print or typewrite name and address including postal zip code of
assignee)
________________________________________________________________________________
this Security and all rights thereunder hereby irrevocably constituting and
appointing
____________________________________________________________________, Attorney,
to transfer this Security on the books of the Trustee, with full power of
substitution in the premises.
Dated:_____________________ _______________________________________
____________________________________________
Notice: The signature(s) on this Assignment
must correspond with the name(s) as written
upon the face of this Security in every
particular, without alteration or
enlargement or any change whatsoever.
8
<PAGE> 1
EXHIBIT 99
PROSPECTUS SUPPLEMENT
(To Prospectus dated October 27, 1998)
$1,400,000,000
Safeway Inc.
$400,000,000 5 3/4% NOTES DUE 2000
$400,000,000 5 7/8% NOTES DUE 2001
$350,000,000 6.05% NOTES DUE 2003
$250,000,000 6 1/2% NOTES DUE 2008
[SAFEWAY INC. LOGO]
------------------------
Interest payable on May 15 and November 15
------------------------
WE MAY, AT ANY TIME, REDEEM THE NOTES DUE 2003 OR THE NOTES DUE 2008,
IN WHOLE OR IN PART, AT THE REDEMPTION PRICES DESCRIBED HEREIN.
------------------------
NOTES DUE 2000 -- PRICE 99.774% AND ACCRUED INTEREST, IF ANY
NOTES DUE 2001 -- PRICE 99.713% AND ACCRUED INTEREST, IF ANY
NOTES DUE 2003 -- PRICE 99.828% AND ACCRUED INTEREST, IF ANY
NOTES DUE 2008 -- PRICE 99.708% AND ACCRUED INTEREST, IF ANY
------------------------
<TABLE>
<CAPTION>
UNDERWRITING DISCOUNTS
PRICE TO PUBLIC AND COMMISSIONS PROCEEDS TO COMPANY
--------------- ---------------------- -------------------
<S> <C> <C> <C>
Per Notes Due 2000................. 99.774% .250% 99.524%
Total......................... $399,096,000 $1,000,000 $398,096,000
Per Notes Due 2001................. 99.713% .350% 99.363%
Total......................... $398,852,000 $1,400,000 $397,452,000
Per Notes Due 2003................. 99.828% .600% 99.228%
Total......................... $349,398,000 $2,100,000 $347,298,000
Per Notes Due 2008................. 99.708% .650% 99.058%
Total......................... $249,270,000 $1,625,000 $247,645,000
</TABLE>
The Securities and Exchange Commission and state securities regulators have not
approved or disapproved these securities or determined if this prospectus
supplement or the accompanying prospectus is truthful or complete. Any
representation to the contrary is a criminal offense.
The Underwriters expect to deliver the notes to purchasers on November 9, 1998.
------------------------
MORGAN STANLEY DEAN WITTER
BT ALEX. BROWN
CHASE SECURITIES INC.
LEHMAN BROTHERS
MERRILL LYNCH & CO.
SALOMON SMITH BARNEY
------------------------
FIRST CHICAGO CAPITAL MARKETS, INC. SCOTIA CAPITAL MARKETS
November 3, 1998
<PAGE> 2
[GRAPHIC OF SAFEWAY OPERATING TERRITORIES]
S-2
<PAGE> 3
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Forward-Looking Statements.................................. S-4
Prospectus Supplement Summary............................... S-5
Use of Proceeds............................................. S-8
Capitalization.............................................. S-9
Selected Financial Data..................................... S-10
Business.................................................... S-12
Description of the Securities............................... S-16
Underwriters................................................ S-24
Legal Matters............................................... S-25
</TABLE>
PROSPECTUS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About this Prospectus....................................... 1
Where You Can Find More Information......................... 1
Disclosure Regarding Forward-Looking Statements............. 2
The Company................................................. 2
Use of Proceeds............................................. 3
Ratio of Earnings to Fixed Charges.......................... 4
Description of Debt Securities.............................. 4
Plan of Distribution........................................ 11
Legal Matters............................................... 12
Experts..................................................... 13
</TABLE>
------------------------
You should rely only on the information contained or incorporated by
reference in this prospectus supplement and the accompanying prospectus. We have
not authorized anyone to provide you with information different from that
contained in this prospectus supplement and the accompanying prospectus. We are
offering to sell the securities, and seeking offers to buy the securities, only
in jurisdictions where offers and sales are permitted. The information contained
in this prospectus supplement and the accompanying prospectus is accurate only
as of the date of this prospectus supplement and the date of the accompanying
prospectus, regardless of the time of delivery of this prospectus supplement or
any sales of the securities. In this prospectus supplement and the accompanying
prospectus, unless otherwise indicated, the "Company," "we," "us" and "our"
refer to Safeway Inc. and its subsidiaries.
S-3
<PAGE> 4
FORWARD-LOOKING STATEMENTS
This prospectus supplement, including the documents that we incorporate by
reference, contains forward-looking statements within the meaning of Section 27A
of the Securities Act of 1933 (the "Securities Act") and Section 21E of the
Securities Exchange Act of 1934 (the "Exchange Act"). Such statements relate to,
among other things, capital expenditures, cost reduction, cash flow and
operating improvements and are indicated by words or phrases such as
"anticipate," "estimate," "plans," "projects," "continuing," "ongoing,"
"expects," "management believes," "the Company believes," "the Company intends,"
"we believe," "we intend" and similar words or phrases. The following factors
are among the principal factors that could cause actual results to differ
materially from the forward-looking statements:
- general business and economic conditions in our operating regions,
including the rate of inflation/ deflation, population, employment and
job growth in our markets;
- pricing pressures and other competitive factors, which could include
pricing strategies, store openings and remodels;
- results of our programs to reduce costs;
- the ability to integrate any companies we acquire and achieve
operating improvements at those companies;
- relations with union bargaining units;
- issues arising from addressing year 2000 information technology
issues;
- opportunities or acquisitions we pursue;
- conditions to the acquisitions of Dominick's Supermarkets, Inc. and
Carr-Gottstein Foods Co., including regulatory approval, which could
affect the timing of these acquisitions; and
- the availability and terms of financing.
Consequently, actual events and results may vary significantly from those
included in or contemplated by or implied by such statements.
S-4
<PAGE> 5
PROSPECTUS SUPPLEMENT SUMMARY
THE COMPANY
We are currently the second largest food and drug chain in North America
(based on sales), with 1,381 stores at September 12, 1998. There have been
several previously announced mergers or acquisitions in the food retailing
business, including acquisitions we are making and those of our competitors.
After the completion of these transactions, we expect to be the third largest
food and drug chain in North America. Our U.S. retail operations are located
principally in northern California, southern California, Oregon, Washington,
Colorado, Arizona and the Mid-Atlantic region. Our Canadian retail operations
are located principally in British Columbia, Alberta and Manitoba/Saskatchewan.
In support of our retail operations, we have an extensive network of
distribution, manufacturing and food processing facilities.
In April 1997, we completed a merger with The Vons Companies, Inc. ("Vons")
pursuant to which we issued 83.2 million shares of our common stock for all of
the shares of Vons common stock that we did not already own. We also hold a 49%
interest in Casa Ley, S.A. de C.V. which, as of September 12, 1998, operated 75
food and general merchandise stores in western Mexico.
RECENTLY ANNOUNCED ACQUISITIONS
Dominick's Acquisition. On October 13, 1998, we signed a definitive
agreement to acquire all of the outstanding shares of Dominick's Supermarkets,
Inc. ("Dominick's") for $49 cash per share, or a total of approximately $1.2
billion. At August 8, 1998, Dominick's had outstanding approximately $646
million of debt, most of which we will repay in connection with that
transaction.
Dominick's operates 111 stores in the greater Chicago metropolitan area and
owns and operates two primary distribution facilities and a dairy processing
plant.
We commenced a cash tender offer for all of Dominick's outstanding shares
on October 19, 1998, and that tender offer is currently set to expire on
November 16, 1998. Affiliates of The Yucaipa Companies and Apollo Advisors, L.P.
that own approximately 41% of the outstanding shares have agreed to tender their
shares in the tender offer and have granted us options to buy their shares at
$49 cash per share upon termination of the definitive agreement in certain
circumstances. Following the successful completion of the tender offer, the
definitive agreement provides that a wholly owned subsidiary of Safeway will be
merged with Dominick's, with Dominick's surviving as our wholly owned
subsidiary.
The acquisition of Dominick's is subject to a number of conditions,
including the valid tender in the tender offer of a majority of Dominick's
outstanding shares (determined on a fully diluted basis, excluding shares
issuable upon exercise of a warrant held by The Yucaipa Companies), the receipt
of certain regulatory approvals and other customary closing conditions. Although
we cannot assure you that all of these conditions will be satisfied or waived,
we believe we will complete the transaction before the end of 1998.
Carr-Gottstein Acquisition. On August 6, 1998, we signed a definitive
agreement to acquire all of the outstanding shares of Carr-Gottstein Foods Co.
("Carr-Gottstein") for $12.50 per share, or a total of approximately $110
million, in a cash merger transaction. In addition, at June 28, 1998,
Carr-Gottstein had outstanding approximately $224 million of debt, substantially
all of which we will repay in connection with that transaction.
Carr-Gottstein is the leading food and drug retailer in Alaska, with 49
stores (including liquor and tobacco stores) primarily located in Anchorage, as
well as Fairbanks, Juneau, Kenai and other Alaska communities. Carr-Gottstein is
Alaska's highest-volume alcoholic beverage retailer through its chain of 17 wine
and liquor stores operated under the name Oaken Keg Spirit Shops. Carr-Gottstein
also operates seven specialty tobacco stores under the name The Great Alaska
Tobacco Company. In addition, Carr-Gottstein's
S-5
<PAGE> 6
vertically integrated organization includes freight transportation operations
and a full-line food warehouse and distribution center.
The definitive agreement requires Carr-Gottstein to call a special meeting
of its stockholders where they will be asked to approve the merger of one of our
wholly owned subsidiaries with Carr-Gottstein, with Carr-Gottstein surviving as
our wholly owned subsidiary. An affiliate of Leonard Green & Associates owns
approximately 35% of the outstanding shares and has agreed to vote its shares in
favor of the transaction. Upon completion of the merger, each outstanding
Carr-Gottstein share will be converted into the right to receive $12.50 in cash.
The acquisition of Carr-Gottstein is subject to a number of conditions,
including the approval of a majority of Carr-Gottstein's outstanding shares,
certain regulatory approvals and other customary closing conditions. We and
Carr-Gottstein have received a request for additional information from the
Federal Trade Commission, and both companies are in the process of compiling
information in response to this request.
In late October 1998, an Alaska consumer group and five individuals filed a
purported class-action lawsuit in Alaska state court seeking an injunction to
prevent our merger with Carr-Gottstein. We and Carr-Gottstein believe the
lawsuit is without merit and intend to defend the lawsuit vigorously. Although
we cannot assure you that all of the conditions to the merger will be satisfied
or waived, or that this lawsuit will be resolved to our satisfaction, we believe
we will complete the transaction in early 1999.
Financing the Acquisitions. We intend to finance the acquisitions of
Dominick's and Carr-Gottstein with a combination of bank borrowings and
commercial paper proceeds. In addition to our existing credit agreement and
commercial paper program, we have recently secured the commitment of a group of
lenders to provide up to $500 million of borrowings under a 364-day credit
facility. See "Use of Proceeds."
After we complete these acquisitions, we will operate more than 1,500
stores in 19 states, the District of Columbia and five Canadian provinces. We
intend to continue to focus on three key priorities, (1) controlling costs, (2)
increasing sales and (3) improving capital management, to enhance the
performance of our operations, including the operations of Dominick's and
Carr-Gottstein.
Our sales and net income for 1997 were $22.5 billion and $557.4 million,
respectively. Dominick's had 1997 revenues of $2.6 billion, and Carr-Gottstein's
1997 revenues were $589 million.
Our principal executive offices are located at 5918 Stoneridge Mall Road,
Pleasanton, California 94588, and our telephone number is (925) 467-3000.
S-6
<PAGE> 7
NOTES DUE 2000
SECURITIES OFFERED............ $400,000,000 principal amount of 5 3/4% Notes
Due 2000.
MATURITY DATE................. The Notes Due 2000 will mature on November 15,
2000.
INTEREST RATE................. 5 3/4% per annum, accruing from November 9,
1998.
OPTIONAL REDEMPTION........... We may not redeem the Notes Due 2000 before
maturity.
NOTES DUE 2001
SECURITIES OFFERED............ $400,000,000 principal amount of 5 7/8% Notes
Due 2001.
MATURITY DATE................. The Notes Due 2001 will mature on November 15,
2001.
INTEREST RATE................. 5 7/8% per annum, accruing from November 9,
1998.
OPTIONAL REDEMPTION........... We may not redeem the Notes Due 2001 before
maturity.
NOTES DUE 2003
SECURITIES OFFERED............ $350,000,000 principal amount of 6.05% Notes
Due 2003.
MATURITY DATE................. The Notes Due 2003 will mature on November 15,
2003.
INTEREST RATE................. 6.05% per annum, accruing from November 9,
1998.
OPTIONAL REDEMPTION........... We may redeem the Notes Due 2003 in whole or in
part at any time at a redemption price
described herein plus accrued interest to the
date of redemption.
NOTES DUE 2008
SECURITIES OFFERED............ $250,000,000 principal amount of 6 1/2% Notes
Due 2008.
MATURITY DATE................. The Notes Due 2008 will mature on November 15,
2008.
INTEREST RATE................. 6 1/2% per annum, accruing from November 9,
1998.
OPTIONAL REDEMPTION........... We may redeem the Notes Due 2008 in whole or in
part at any time at a redemption price
described herein plus accrued interest to the
date of redemption.
CERTAIN COMMON TERMS OF THE SECURITIES
INTEREST PAYMENT DATES........ May 15 and November 15, commencing May 15,
1999.
COVENANTS..................... The indenture contains covenants that limit our
ability and our subsidiaries' ability to incur
liens secured by our indebtedness and to engage
in sale and lease-back transactions. See
"Description of the Securities -- Covenants."
LIMITATION ON INCURRENCE
OF NEW DEBT................. The indenture does not limit the amount of debt
that we may issue or provide holders any
protection should we be involved in a highly
leveraged transaction.
RANKING....................... The securities will rank equal to all of our
other existing and future senior unsecured
indebtedness.
S-7
<PAGE> 8
USE OF PROCEEDS
We anticipate our net proceeds from the sale of these securities to be
$1.389 billion after deducting underwriting discounts and commissions and
estimated offering expenses. We expect to use the net proceeds to reduce
indebtedness under our commercial paper program and our bank credit agreement.
Any remaining proceeds will be invested in short-term interest-bearing
instruments or other investment-grade securities. We anticipate using those
remaining proceeds, issuing commercial paper, borrowing under the bank credit
agreement and/or borrowing under a new 364-day credit facility to fund our
acquisitions of Dominick's and Carr-Gottstein, which will total approximately
$1.3 billion. In addition, based on debt outstanding of Dominick's as of August
8, 1998 and of Carr-Gottstein as of June 28, 1998, we expect to repay
approximately $700 million of their outstanding indebtedness. The actual amount
we repay will vary from $700 million because that outstanding indebtedness will
change prior to the closing of those transactions.
S-8
<PAGE> 9
CAPITALIZATION
The following table sets forth our short-term debt and capitalization as of
September 12, 1998, as adjusted to give effect to this offering of securities.
You should read this table in conjunction with our consolidated financial
statements and accompanying notes which we incorporate herein by reference. See
"Where You Can Find More Information" in the accompanying prospectus.
<TABLE>
<CAPTION>
SEPTEMBER 12, 1998
-----------------------------
ACTUAL AS ADJUSTED(1)(2)
-------- -----------------
(IN MILLIONS)
<S> <C> <C>
Short-Term Debt............................................. $ 313.6 $ 313.6
======== ========
Long-Term Debt
Bank Credit Agreement..................................... $ 77.1 $ --
Securities offered hereby................................. -- 1,400.0
Other long-term debt...................................... 2,129.2 873.2
Obligations under capital leases.......................... 212.2 212.2
Other notes payable....................................... 122.0 122.0
-------- --------
Total long-term debt.............................. 2,540.5 2,607.4
-------- --------
Stockholders' equity
Common Stock, par value $.01 per share; 486.0 shares
outstanding, after deducting 60.8 treasury shares(3)... 5.5 5.5
Additional paid-in capital................................ 1,245.5 1,245.5
Unexercised warrants purchased............................ (322.7) (322.7)
Cumulative translation adjustments.......................... (17.0) (17.0)
Retained earnings........................................... 1,866.7 1,866.7
-------- --------
Total stockholders' equity........................ 2,778.0 2,778.0
-------- --------
Total capitalization.............................. $5,318.5 $5,385.4
======== ========
</TABLE>
- ---------------
(1) Assumes we sell $1.4 billion aggregate principal amount of securities and
apply the proceeds to repay outstanding indebtedness under our commercial
paper program and our bank credit agreement and the remaining proceeds are
invested in short-term interest-bearing instruments or other
investment-grade securities.
(2) In order to finance the acquisitions of Dominick's and Carr-Gottstein, we
expect to use the remaining proceeds from this offering, issue commercial
paper and/or borrow under our bank credit facilities, which will total
approximately $1.3 billion. In addition, based on debt outstanding of
Dominick's as of August 8, 1998 and of Carr-Gottstein as of June 28, 1998,
we expect to repay approximately $700 million of their $870 million of
outstanding indebtedness. See "Use of Proceeds."
(3) Does not include up to 38.8 million shares of common stock issuable upon
exercise of outstanding stock options and 18.4 million shares of common
stock issuable upon exercise of outstanding warrants.
S-9
<PAGE> 10
SELECTED FINANCIAL DATA
SAFEWAY INC. AND SUBSIDIARIES
The financial data below are derived from our audited consolidated
financial statements, except for the financial data for the 36-week periods
ended September 12, 1998 and September 6, 1997, which are derived from unaudited
financial statements. You should read the selected financial data in conjunction
with our consolidated financial statements and accompanying notes, which we have
incorporated by reference herein. In the opinion of our management, the results
of operations for the 36 weeks ended September 12, 1998 and September 6, 1997
contain all adjustments that are of a normal and recurring nature necessary to
present fairly the financial position and results of operations for these
periods. The results for the 36 weeks ended September 12, 1998 are not
necessarily indicative of the results expected for the full year.
(DOLLARS IN MILLIONS, EXCEPT RATIOS AND PER-SHARE AMOUNTS)
<TABLE>
<CAPTION>
36 WEEKS ENDED
---------------------- 53 52 52 52 52
SEPT. 12, SEPT. 6, WEEKS WEEKS WEEKS WEEKS WEEKS
1998 1997(1) 1997(1) 1996 1995 1994 1993
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS:
Sales........................... $16,561.6 $14,698.4 $22,483.8 $17,269.0 $16,397.5 $15,626.6 $15,214.5
--------- --------- --------- --------- --------- --------- ---------
Gross profit.................... 4,836.4 4,203.4 6,414.7 4,774.2 4,492.4 4,287.3 4,123.3
Operating and administrative
expense....................... (3,746.5) (3,363.3) (5,135.0) (3,882.5) (3,765.0) (3,675.2) (3,681.8)
--------- --------- --------- --------- --------- --------- ---------
Operating profit................ 1,089.9 840.1 1,279.7 891.7 727.4 612.1 441.5
Interest expense................ (153.2) (163.7) (241.2) (178.5) (199.8) (221.7) (265.5)
Equity in earnings of
unconsolidated affiliates..... 16.7 25.6 34.9 50.0 26.9 27.3 33.5
Other income, net............... 1.9 2.1 2.9 4.4 2.0 6.4 6.8
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes and
extraordinary loss............ 955.3 704.1 1,076.3 767.6 556.5 424.1 216.3
Income taxes.................... (403.6) (297.5) (454.8) (307.0) (228.2) (173.9) (93.0)
--------- --------- --------- --------- --------- --------- ---------
Income before extraordinary
loss.......................... 551.7 406.6 621.5 460.6 328.3 250.2 123.3
Extraordinary loss, net of tax
benefit of $41.1, $41.1 $1.3
and $6.7...................... -- (64.1) (64.1) -- (2.0) (10.5) --
--------- --------- --------- --------- --------- --------- ---------
Net income...................... $ 551.7 $ 342.5 $ 557.4 $ 460.6 $ 326.3 $ 239.7 $ 123.3
========= ========= ========= ========= ========= ========= =========
Diluted earnings per share:
Income before extraordinary
loss........................ $ 1.09 $ 0.82 $ 1.25 $ 0.97 $ 0.68 $ 0.51 $ 0.25
Extraordinary loss............ -- (0.13) (0.13) -- -- (0.02) --
--------- --------- --------- --------- --------- --------- ---------
Net income.................... $ 1.09 $ 0.69 $ 1.12 $ 0.97 $ 0.68 $ 0.49 $ 0.25
========= ========= ========= ========= ========= ========= =========
FINANCIAL STATISTICS:
Identical-store sales(2)(3)..... 4.2% 0.8% 1.3% 5.1% 4.6% 4.4% 2.1%
Comparable-store sales(2)....... 4.8 2.5 2.2 6.1 5.5 5.0 3.5
Gross profit margin............. 29.20 28.60 28.53 27.65 27.40 27.44 27.10
Operating and administrative
expense as a percent of
sales......................... 22.62 22.88 22.84 22.48 22.96 23.52 24.20
Operating profit margin......... 6.58 5.72 5.7 5.2 4.4 3.9 2.9
Operating cash flow(4).......... $ 1,451.1 $ 1,148.9 $ 1,732.3 $ 1,239.5 $ 1,068.6 $ 947.6 $ 777.0
Operating cash flow margin...... 8.76% 7.82% 7.70% 7.18% 6.52% 6.06% 5.11%
Capital expenditures(5)......... $ 538.1 $ 379.6 $ 829.4 $ 620.3 $ 503.2 $ 352.2 $ 290.2
Depreciation and amortization... 354.7 304.4 455.8 338.5 329.7 326.4 330.2
Total assets.................... 8,603.4 8,176.2 8,493.9 5,545.2 5,194.3 5,022.1 5,074.7
Total debt...................... 2,854.1 3,353.2 3,340.3 1,984.2 2,190.2 2,196.1 2,689.2
Stockholders' equity............ 2,778.0 1,921.5 2,149.0 1,186.8 795.5 643.8 382.9
Weighted average shares
outstanding -- diluted (in
millions)..................... 508.1 494.6 497.7 475.7 481.2 494.2 493.8
Ratio of earnings to fixed
charges(6).................... 5.01x 3.97x 4.10x 3.63x 2.81x 2.28x 1.51x
OTHER STATISTICS:
Vons stores acquired in 1997.... -- 316 316 -- -- -- --
Total stores at period-end...... 1,381 1,367 1,368 1,052 1,059 1,062 1,078
Remodels completed during the
period(7)..................... N/A N/A 181 141 108 71 45
Total retail square footage at
period-end (in millions)...... 53.8 52.0 53.2 40.7 40.1 39.5 39.4
</TABLE>
- ---------------
(1) We completed our acquisition of Vons on April 8, 1997. The results of
operations of Vons are included in our results of operations as of the
beginning of the second quarter of 1997.
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<PAGE> 11
(2) Reflects sales increases for stores (including Vons stores for the final 41
weeks of 1997 and 1998) operating the entire measurement period in both the
current and prior periods. The 1997 and 1996 annual identical-store sales
and comparable-store sales exclude British Columbia stores, which were
closed during a labor dispute in 1996.
(3) Excludes replacement stores.
(4) Defined as FIFO earnings before income taxes, interest, depreciation,
amortization, income from unconsolidated affiliates and extraordinary
losses. Operating cash flow is similar to net cash flow from operations
(which is presented in our Condensed Consolidated Statements of Cash Flows
incorporated in this prospectus supplement by reference) because it excludes
certain noncash items. However, operating cash flow also excludes interest
expense and income taxes. Management believes that operating cash flow is
relevant because it assists investors in evaluating our ability to service
our debt by providing a commonly used measure of cash available to pay
interest, and it facilitates comparisons of our results of operations with
those of companies having different capital structures. Other companies may
define operating cash flow differently, and, as a result, those measures may
not be comparable to our operating cash flow.
(5) Defined under "Business -- Capital Expenditure Program."
(6) For these ratios, "earnings" represents income before income taxes,
extraordinary loss, equity in earnings of unconsolidated affiliates,
minority interest in subsidiary and fixed charges (other than capitalized
interest). "Fixed charges" represents interest on indebtedness (including
capitalized interest) and a share of rental expense which is deemed to be
representative of the interest factor.
(7) Defined as store projects (other than maintenance) generally requiring
expenditures in excess of $200,000.
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<PAGE> 12
BUSINESS
We are currently the second largest food and drug chain in North America
(based on sales), with 1,381 stores at September 12, 1998. There have been
several previously announced mergers or acquisitions in the food retailing
business, including acquisitions we are making and those of our competitors.
After the completion of these transactions, we expect to be the third largest
food and drug chain in North America. Our U.S. retail operations are located
principally in northern California, southern California, Oregon, Washington,
Colorado, Arizona and the Mid-Atlantic region. Our Canadian retail operations
are located principally in British Columbia, Alberta and Manitoba/Saskatchewan.
In support of our retail operations, we have an extensive network of
distribution, manufacturing and food processing facilities.
In April 1997, we completed a merger with Vons pursuant to which we issued
83.2 million shares of our common stock for all of the shares of Vons common
stock that we did not already own. We also hold a 49% interest in Casa Ley, S.A.
de C.V. which, as of September 12, 1998, operated 75 food and general
merchandise stores in western Mexico.
After we complete the acquisitions of Dominick's and Carr-Gottstein, we
will operate more than 1,500 stores in 19 states, the District of Columbia and
five Canadian provinces. We intend to continue to focus on three key priorities,
(1) controlling costs, (2) increasing sales and (3) improving capital
management, to enhance the performance of our operations, including the
operations of Dominick's and Carr-Gottstein.
Our sales and net income for 1997 were $22.5 billion and $557.4 million,
respectively. Dominick's had 1997 revenues of $2.6 billion, and Carr-Gottstein's
1997 revenues were $589 million.
We may not be able to complete the acquisitions of Dominick's or
Carr-Gottstein because one or more of the conditions to those transactions may
not be satisfied. Even if we do consummate these transactions, there is a risk
that we may not be able to implement programs to enhance the performance of
operations at Dominick's or Carr-Gottstein in a timely manner, if at all. If we
do achieve success in any one area, that success may be diluted by our inability
to produce results in another. These acquisitions also present certain risks
with regard to the integration of Dominick's and Carr-Gottstein with Safeway,
including risks relating to coordinating different operations and integrating
personnel and corporate cultures. We cannot assure you that we will be able to
integrate these operations effectively or in a timely manner. If we are not
successful in integrating these operations, our financial results could be
adversely affected.
OPERATING STRATEGY
During the past five years, our management team has demonstrated
proficiency at turning around underperforming assets. Central to its success is
a simple but powerful formula that focuses on three key priorities: (1)
controlling costs, (2) increasing sales and (3) improving capital management.
Management's focus on these three priorities has produced significant progress
in the following key measures of financial performance:
- Identical-store sales growth
- Expense ratio reduction
- Working capital management
- Operating cash flow margin
- Earnings per share growth
We continue to be focused on these same three priorities and expect
continued improvement, but we cannot assure you as to the future results we will
be able to achieve.
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<PAGE> 13
Controlling Costs
We have focused on controlling and reducing elements of our cost of sales
through:
- better buying practices;
- lower advertising expenses;
- distribution efficiencies;
- manufacturing plant closures and consolidations;
- improved category management; and
- increased private label mix.
Our efforts to control or reduce operating and administrative expenses have
included overhead reduction in our administrative support functions, negotiation
of competitive labor agreements, store level work simplification, consolidation
of our information technology operations, elimination of certain corporate
perquisites and the general encouragement of a "culture of thrift" among
employees.
Increasing Sales
We have increased sales by achieving and maintaining competitive pricing,
improving store standards, enhancing customer service and offering high quality
products. Our efforts to upgrade store standards have focused on improving store
appearance, in-stock condition, employee friendliness and speed of checkout. We
have over 850 premium corporate brand products under the "Safeway SELECT" banner
and recently added "Great Meal Combos," a line of prepared entrees and side
dishes, to our deli offerings. Since our merger with Vons, we have been applying
certain sales strategies that each of Safeway and Vons have employed
successfully. For example, we have introduced in all of our Safeway operating
areas the Safeway Club Card (a customer loyalty program designed to reward
frequent shoppers) which was inspired by a similar program at Vons.
Improving Capital Management
Our capital management has improved in two key areas: capital expenditures
and working capital. In the capital expenditure area, we have expanded our use
of standardized layouts and centralized purchasing agreements for building
materials, fixtures and equipment for our new stores and remodels. As a result,
our new store prototype is less expensive to build and more efficient to operate
than the stores we and Vons previously built and operated. These lower project
costs, coupled with our improved operations, have allowed us to improve our
returns on capital investment. Working capital invested in the business has
declined substantially since year-end 1993, primarily through lower warehouse
inventory levels and improved payables management.
RETAIL OPERATIONS
Stores
We operate stores ranging in size from approximately 5,900 square feet to
over 89,000 square feet. We determine the size of a new store based on a number
of considerations, including the needs of the community the store serves, the
location and site plan, and the estimated return on capital invested. Our
primary new store prototype is 55,000 square feet and is designed to accommodate
changing consumer needs and to achieve certain operating efficiencies. Most
stores offer a wide selection of both food and general merchandise and feature a
variety of specialty departments such as bakery, delicatessen, floral and
pharmacy. In most of our larger stores, specialty departments are showcased in
each corner and along the perimeter walls of the store to create a pleasant
shopping atmosphere.
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<PAGE> 14
Merchandising
Our operating strategy is to provide value to our customers by maintaining
high store standards and a wide selection of high quality products at
competitive prices. We emphasize high quality perishables, such as produce and
meat, and specialty departments, including in-store bakery, delicatessen, floral
and pharmacy, designed to provide one-stop shopping for today's busy shoppers.
We have developed a line of over 850 premium corporate brand products under
the "Safeway SELECT" banner. These products include, among others, soft drinks,
pasta and pasta sauces, salsa, whole bean coffee, cookies, ice cream, yogurt,
pet food and laundry detergent. The line also includes Safeway SELECT "Healthy
Advantage" items such as low-fat ice cream and low-fat cereal bars, and Safeway
SELECT "Gourmet Club" frozen entrees and hors d'oeuvres.
DISTRIBUTION
Each of our ten retail operating areas is served by a regional distribution
center consisting of one or more facilities. We have 13 distribution/warehousing
centers (ten in the United States and three in Canada), which collectively
provide the majority of all products to our stores. Our distribution centers in
northern California and British Columbia are operated by a third party.
Management regularly reviews distribution operations focusing on whether these
operations support their operating areas in a cost-effective manner. As a result
of such reviews, we are constructing a replacement distribution center in
Maryland which we expect to complete by the end of 1998.
CAPITAL EXPENDITURE PROGRAM
A component of our long-term strategy is our capital expenditure program.
Our capital expenditure program funds new stores, remodels, information
technology advances, and other facilities, including plant and distribution
facilities and corporate headquarters. In the last several years, our management
has significantly strengthened our program to select and approve new capital
investments, resulting in improved returns on investment.
The table below reconciles for the last three fiscal years cash paid for
property additions reflected in our consolidated statements of cash flows to our
broader definition of capital expenditures, excluding Vons, and also details
changes in our store base during such period:
<TABLE>
<CAPTION>
1997 1996 1995
------ ------ ------
(DOLLARS IN MILLIONS)
<S> <C> <C> <C>
Cash paid for property additions............................ $758.2 $541.8 $450.9
Less: Purchases of previously leased properties............. (28.2) (13.2) (9.9)
Plus: Present value of all lease obligations incurred....... 91.3 91.7 62.2
Mortgage notes assumed in property acquisitions........ 0.9 -- --
Vons first quarter expenditures........................ 7.2 -- --
------ ------ ------
Total capital expenditures........................ $829.4 $620.3 $503.2
====== ====== ======
Capital expenditures as a percent of sales.................. 3.7% 3.6% 3.1%
Vons stores acquired........................................ 316 -- --
New stores opened........................................... 37 30 32
Stores closed or sold....................................... 37 37 35
Remodels.................................................... 181 141 108
Total retail square footage at year-end (in
millions)....................................... 53.2 40.7 40.1
</TABLE>
Improved operations and lower project costs have raised the return on
capital projects, allowing us to increase capital expenditures. Our capital
expenditures in fiscal 1998 are expected to increase to approximately $1.0
billion and will be used primarily to open about 40 new stores, complete more
than 200 remodels and finish construction of the Maryland distribution center.
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<PAGE> 15
ACQUISITIONS
Our management believes that the supermarket industry in North America is
fragmented and that there may be opportunities to make other acquisitions that
would enhance our long-term growth. Our criteria for considering acquisition
targets include, but are not limited to, strong market share and the potential
for improving operating cash flow margin. These criteria are subject to review
and modification from time to time. We cannot assure you that we will complete
any such acquisition or that, if completed, the business acquired will make any
contribution to our long-term growth.
EMPLOYEES
At September 12, 1998, we had approximately 149,300 full and part-time
employees. Approximately 90% of our employees in the United States and Canada
are covered by collective bargaining agreements negotiated with local unions
affiliated with one of 12 different international unions. There are
approximately 400 such agreements, typically having three-to-five-year terms.
Accordingly, we renegotiate a significant number of these agreements every year.
We have concluded early negotiations and signed new labor contracts
covering employees whose collective bargaining agreements had been due to expire
in 1998. Certain of these contracts were with employees represented by the
United Food and Commercial Workers Union in northern California and Seattle and
Spokane, Washington and by the International Brotherhood of Teamsters in
southern California. In addition, union members in British Columbia ratified a
new labor contract. Our management considers the terms of these new contracts to
be satisfactory. As a result of these early negotiations, the only significant
remaining labor contract to be negotiated in 1998 is in the Winnipeg operating
area covering approximately 40 stores.
In the last three years there have been four significant work stoppages.
During the second quarter of 1997, we were engaged in a 75-day labor dispute
affecting 74 stores in the Alberta, Canada operating area. We continued to
operate the affected stores with a combination of replacement workers,
management and employees who returned to work. During the second and third
quarters of 1996, we were engaged in a labor dispute in British Columbia which
lasted 40 days and affected 86 stores. Under Provincial law in British Columbia,
replacement workers could not be hired, and therefore all the affected stores
were closed throughout the strike-lockout. Separately, we were engaged in a
strike-lockout in the Denver operating area which lasted 44 days also during the
second and third quarters of 1996. All of the Denver stores operated during the
strike-lockout, largely with replacement workers. A nine-day strike during the
second quarter of 1995 affected 208 stores in northern California. These work
stoppages were resolved in a manner that management considered generally
satisfactory. We estimate that the Alberta strike reduced 1997 net income by
approximately $0.04 per share, that the combined impact of the disputes in
Denver and British Columbia reduced 1996 earnings by approximately $0.07 per
share, and that the dispute in northern California reduced 1995 earnings by an
estimated $0.01 per share.
S-15
<PAGE> 16
DESCRIPTION OF THE SECURITIES
The following description of the particular terms of the securities offered
hereby (referred to in the accompanying prospectus as the "debt securities")
supplements, and to the extent inconsistent replaces, the description of the
general terms and provisions of the debt securities set forth in the
accompanying prospectus.
We will issue the securities under an indenture between us and The Bank of
New York, as trustee. The securities will constitute four different series of
debt securities described in the accompanying prospectus. We have summarized
select portions of the indenture below. The summary is not complete and is
qualified by reference to the indenture. Capitalized terms not otherwise defined
herein have the meanings given them in the accompanying prospectus or the
indenture.
In this section, "we," "our" and "us" mean Safeway Inc. excluding, unless
the context otherwise requires or as otherwise expressly stated, our
subsidiaries.
Each series of securities is being sold separately and not as a unit.
CERTAIN TERMS OF THE NOTES DUE 2000
The Notes Due 2000:
- will be limited to $400,000,000 aggregate principal amount; and
- will mature on November 15, 2000.
CERTAIN TERMS OF THE NOTES DUE 2001
The Notes Due 2001:
- will be limited to $400,000,000 aggregate principal amount; and
- will mature on November 15, 2001.
CERTAIN TERMS OF THE NOTES DUE 2003
The Notes Due 2003:
- will be limited to $350,000,000 aggregate principal amount; and
- will mature on November 15, 2003.
CERTAIN TERMS OF THE NOTES DUE 2008
The Notes Due 2008:
- will be limited to $250,000,000 aggregate principal amount; and
- will mature on November 15, 2008.
CERTAIN COMMON TERMS OF THE SECURITIES
The securities will bear interest from November 9, 1998 at the respective
rates shown on the front cover of this prospectus supplement, payable on May 15
and November 15 of each year, commencing May 15, 1999, to the persons in whose
names the securities are registered on the preceding May 1 and November 1,
respectively. The securities will be senior unsecured obligations and will be
issued in denominations of $1,000 and integral multiples of $1,000.
We will pay principal and interest on the securities, register the transfer
of securities and exchange the securities at our office or agency maintained for
that purpose (which initially will be the corporate trust office of the trustee
located at 101 Barclay Street, Floor 21W, New York, New York 10286, Attention:
Corporate Trust Administration). So long as the securities are represented by
global debt securities, the interest payable on the securities will be paid to
Cede & Co., the nominee of the Depositary, or its registered assigns as the
S-16
<PAGE> 17
registered owner of such global debt securities, by wire transfer of immediately
available funds on each of the applicable interest payment dates. If any of the
securities are no longer represented by a global debt security, we have the
option to pay interest by check mailed to the address of the person entitled to
the interest. No service charge will be made for any transfer or exchange of
securities, but we may require payment of a sum sufficient to cover any tax or
other governmental charge payable.
The securities are not subject to a sinking fund or to redemption or
repurchase by us at the option of the holders.
OPTIONAL REDEMPTION
The Notes Due 2000 and the Notes Due 2001 are not redeemable prior to
maturity.
The Notes Due 2003 and the Notes Due 2008 are redeemable, in whole or in
part, at any time at a redemption price equal to the greater of:
- 100% of the principal amount of such series of securities then
outstanding; or
- as determined by an Independent Investment Banker, the sum of the
present values of the remaining scheduled payments of principal and
interest thereon (not including any portion of such payments of
interest accrued as of the date of redemption) discounted to the
redemption date on a semiannual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate,
plus 12.5 basis points in the case of the Notes Due 2003 or plus 25
basis points in the case of the Notes Due 2008,
plus, in either of the above cases, accrued and unpaid interest thereon to the
date of redemption.
"Adjusted Treasury Rate" means, with respect to any redemption date:
- the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor
publication which is published weekly by the Board of Governors of the
Federal Reserve System and which establishes yields on actively traded
United States Treasury securities adjusted to constant maturity under
the caption "Treasury Constant Maturities," for the maturity
corresponding to the Comparable Treasury Issue (if no maturity is
within three months before or after the Remaining Life, yields for the
two published maturities most closely corresponding to the Comparable
Treasury Issue shall be determined and the Adjusted Treasury Rate
shall be interpolated or extrapolated from such yields on a straight
line basis, rounding to the nearest month); or
- if such release (or any successor release) is not published during the
week preceding the calculation date or does not contain such yields,
the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, calculated using a price
for the Comparable Treasury Issue (expressed as a percentage of its
principal amount) equal to the Comparable Treasury Price for such
redemption date. The Adjusted Treasury Rate shall be calculated on the
third Business Day preceding the redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker as having a maturity comparable to
the remaining term of the securities to be redeemed that would be utilized, at
the time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such securities ("Remaining Life").
"Comparable Treasury Price" means (1) the average of five Reference
Treasury Dealer Quotations for such redemption date, after excluding the highest
and lowest Reference Treasury Dealer Quotations, or (2) if the Independent
Investment Banker obtains fewer than five such Reference Treasury Dealer
Quotations, the average of all such quotations.
S-17
<PAGE> 18
"Independent Investment Banker" means one of the Reference Treasury Dealers
appointed by the trustee after consultation with us.
"Reference Treasury Dealer" means:
- each of Morgan Stanley & Co. Incorporated, BT Alex. Brown
Incorporated, Chase Securities Inc., Lehman Brothers Inc., Merrill
Lynch, Pierce, Fenner & Smith Incorporated and Salomon Smith Barney
Inc. and their respective successors; provided, however, that if any
of the foregoing shall cease to be a primary U.S. Government
securities dealer in New York City (a "Primary Treasury Dealer"), we
shall substitute therefor another Primary Treasury Dealer; and
- any other Primary Treasury Dealer selected by the trustee after
consultation with us.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Independent Investment Banker, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Independent Investment Banker at 5:00
p.m., New York City time, on the third Business Day preceding such redemption
date.
We will mail a notice of redemption at least 30 days but not more than 60
days before the redemption date to each holder of the securities to be redeemed.
Unless we default in payment of the redemption price, on and after the
redemption date, interest will cease to accrue on the securities or portions
thereof called for redemption.
LEVERAGE
As of September 12, 1998, we had approximately $2.9 billion of outstanding
indebtedness. At September 12, 1998, on a pro forma basis after giving effect to
this offering of securities and the acquisitions of Dominick's and
Carr-Gottstein (based on outstanding indebtedness of Dominick's and
Carr-Gottstein at August 8, 1998 and June 28, 1998, respectively), we would have
had $5.1 billion of outstanding indebtedness. We have indebtedness that is
substantial in relation to our stockholders' equity. At September 12, 1998, on a
pro forma basis after giving effect to this offering of securities and the
acquisitions of Dominick's and Carr-Gottstein (based on outstanding indebtedness
of Dominick's and Carr-Gottstein at August 8, 1998 and June 28, 1998,
respectively), we would have had a ratio of total debt to stockholders' equity
of 1.83 to 1.0. See "Capitalization." Our ability to satisfy our obligations
with respect to the securities will be dependent upon our future performance,
which will be subject to financial and business conditions and other factors.
RANKING
With respect to our assets, the securities will be senior unsecured
indebtedness and will rank equal in right of payment with all of our other
senior unsecured obligations, including our obligations under the Bank Credit
Agreement (which is currently unsecured), and senior in right of payment to all
of our existing and future subordinated debt. We conduct certain of our
operations through direct and indirect wholly owned subsidiaries, including
Canada Safeway Limited and Vons. Accordingly, we could be dependent on the
earnings of our subsidiaries (which will include Dominick's and Carr-Gottstein
once those acquisitions are completed) to meet our debt obligations, including
the securities, if our future performance, excluding the operations of our
subsidiaries, is not adequate to allow us to satisfy those obligations. Although
such earnings may be provided to us by our subsidiaries through dividends and
payments on intercompany indebtedness, certain outstanding indebtedness of our
subsidiaries in the future may restrict the payment of dividends to us. In
addition, under applicable law, our subsidiaries may be limited in the amount
that they are permitted to pay as dividends on their capital stock. Also as a
result of this structure, the claims of holders of the securities effectively
will be subordinated to the claims of creditors of these subsidiaries as to the
assets of these subsidiaries, which claims include trade payables, obligations
of Canada Safeway Limited and Vons under the Bank Credit Agreement and certain
other indebtedness of these subsidiaries.
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<PAGE> 19
COVENANTS
Limitation on Liens
The indenture provides that, with respect to each series of securities, we
will not, nor will we permit any of our Subsidiaries to, create, incur, or
permit to exist, any Lien on any of our or their respective properties or
assets, whether now owned or hereafter acquired, or upon any income or profits
therefrom, in order to secure any of our Indebtedness, without effectively
providing that such series of securities shall be equally and ratably secured
until such time as that Indebtedness is no longer secured by such Lien, except:
- Liens existing as of the closing date of the offering of these
securities (the "Closing Date");
- Liens granted after the Closing Date on any of our or our
Subsidiaries' assets or properties securing our Indebtedness created in
favor of the holders of that series;
- Liens securing our Indebtedness which is incurred to extend, renew or
refinance Indebtedness which is secured by Liens permitted to be
incurred under the indenture; provided that those Liens do not extend
to or cover any of our or our Subsidiaries' property or assets other
than the property or assets securing the Indebtedness being refinanced
and that the principal amount of such Indebtedness does not exceed the
principal amount of the Indebtedness being refinanced;
- Permitted Liens; and
- Liens created in substitution of or as replacements for any Liens
permitted by the clauses directly above, provided that, based on a good
faith determination of one of our officers, the property or asset
encumbered under any such substitute or replacement Lien is
substantially similar in nature to the property or asset encumbered by
the otherwise permitted Lien which is being replaced.
Notwithstanding the foregoing, we and any of our Subsidiaries may, without
securing any series of securities, create, incur or permit to exist Liens which
would otherwise be subject to the restrictions set forth in the preceding
paragraph, if after giving effect thereto and at the time of determination,
Exempted Debt does not exceed the greater of (i) 10% of Consolidated Net
Tangible Assets or (ii) $350,000,000.
Limitation on Sale and Lease-Back Transactions
The indenture provides that we will not, nor will we permit any of our
Subsidiaries to, enter into any sale and lease-back transaction for the sale and
leasing back of any property or asset, whether now owned or hereafter acquired,
of ours or any of our Subsidiaries, except such transactions:
- entered into prior to the Closing Date;
- for the sale and leasing back to us of any property or asset by one of
our Subsidiaries;
- involving leases for less than three years; or
- in which the lease for the property or asset is entered into within
120 days after the later of the date of acquisition, completion of
construction or commencement of full operations of such property or
asset unless:
- we or the Subsidiary would be entitled under the Limitation on
Liens covenant above to create, incur or permit to exist a Lien on
the assets to be leased in an amount at least equal to the
Attributable Liens in respect of such transaction without equally
and ratably securing the securities of that series; or
- the proceeds of the sale of the assets to be leased are at least
equal to their fair market value and the proceeds are applied to
the purchase or acquisition (or in the case of real property, the
construction) of assets or to the repayment of our or one of our
Subsidiaries' Indebtedness which by its terms matures not earlier
than one year after the date of such repayment.
S-19
<PAGE> 20
Consolidation, Merger and Sale of Assets
The indenture provides that we may not consolidate with or merge with or
into, or convey, transfer or lease all or substantially all of our properties
and assets to, any person (a "successor person") unless:
- we are the surviving corporation or the successor person (if other
than us) is a corporation organized and validly existing under the laws
of any U.S. domestic jurisdiction and expressly assumes our obligations
on such series of securities and under the indenture;
- immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default shall have occurred and be continuing
under the indenture; and
- certain other conditions are met.
EVENTS OF DEFAULT
In addition to the Events of Default set forth in the accompanying
prospectus, the following is an Event of Default with respect to each series of
securities: acceleration of $150,000,000 or more, individually or in the
aggregate, in principal amount of our Indebtedness under the terms of the
instrument under which that Indebtedness is issued or secured, except as a
result of compliance with applicable laws, orders or decrees, if that
Indebtedness is not discharged or the acceleration is not annulled within 10
days after written notice.
DEFEASANCE
The provisions described under "Description of Debt
Securities -- Defeasance of Debt Securities and Certain Covenants in Certain
Circumstances" in the accompanying prospectus are applicable to the securities.
BOOK-ENTRY, DELIVERY AND FORM
Each series of securities will be represented by one or more global debt
securities that will be deposited with, or on behalf of, the Depositary and
registered in the name of Cede & Co., the nominee of the Depositary.
The Depositary has advised us and the underwriters that it is:
- a limited-purpose trust company organized under the New York Banking
Law;
- a "banking organization" within the meaning of the New York Banking
Law;
- a member of the Federal Reserve System;
- a "clearing corporation" within the meaning of the New York Uniform
Commercial Code; and
- a "clearing agency" registered pursuant to the provisions of Section
17A of the Exchange Act.
The Depositary was created to hold securities of its participating
organizations ("participants") and to facilitate the clearance and settlement of
securities transactions, such as transfers and pledges, among its participants
in such securities through electronic computerized book-entry changes in
accounts of the participants, thereby eliminating the need for physical movement
of securities certificates. Participants include securities brokers and dealers
(including the underwriters), banks, trust companies, clearing corporations and
certain other organizations, some of whom (and/or their representatives) own the
Depositary. Access to the Depositary's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly. Persons who are not participants may beneficially own securities
held by the Depositary only through participants.
Unless and until it is exchanged in whole or in part for certificated debt
securities, in definitive form, a global debt security may not be transferred
except as a whole by the Depositary to a nominee of the Depositary or by a
nominee of the Depositary to the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor depositary or a nominee
of such successor depositary.
S-20
<PAGE> 21
The Depositary has further advised us that the Depositary's management is
aware that some computer applications, systems, and the like for processing data
that are dependent upon calendar dates, including dates before, on, and after
January 1, 2000, may encounter "Year 2000 problems." The Depositary has informed
its participants and other members of the financial community that it has
developed and is implementing a program so that its systems, as the same relate
to the timely payment of distributions (including principal and interest
payments) to security holders, book-entry deliveries, and settlement of trades
within the Depositary, continue to function appropriately. This program includes
a technical assessment and a remediation plan, each of which is complete.
Additionally, the Depositary's plan includes a testing phase, which is expected
to be completed within appropriate time frames.
However, the Depositary's ability to perform properly its services is also
dependent upon other parties, including but not limited to issuers and their
agents, as well as third party vendors from whom the Depositary licenses
software and hardware, and third party vendors on whom the Depositary relies for
information or the provision of services, including telecommunication and
electrical utility service providers, among others. The Depositary has informed
its participants and other members of the financial community that it is
contacting (and will continue to contact) third party vendors from whom the
Depositary acquires services to: (i) impress upon them the importance of such
services being Year 2000 compliant; and (ii) determine the extent of their
efforts for Year 2000 remediation (and, as appropriate, testing) of their
services. In addition, the Depositary is in the process of developing such
contingency plans as it deems appropriate.
According to the Depositary, the foregoing information with respect to the
Depositary has been provided to its participants and other members of the
financial community for informational purposes only and is not intended to serve
as a representation, warranty, or contract modification of any kind.
A further description of the Depositary's procedures with respect to the
securities is set forth in the accompanying prospectus under the heading
"Description of Debt Securities -- Transfer and Exchange -- Global Debt
Securities and Book-Entry System."
CERTAIN DEFINITIONS
"Attributable Liens" means in connection with a sale and lease-back
transaction the lesser of:
- the fair market value of the assets subject to such transaction; and
- the present value (discounted at a rate per annum equal to the average
interest borne by all outstanding securities issued under the indenture
(which may include securities in addition to the securities) determined
on a weighted average basis and compounded semi-annually) of the
obligations of the lessee for rental payments during the term of the
related lease.
"Bank Credit Agreement" means the Credit Agreement dated as of April 8,
1997 among Safeway Inc., Vons and Canada Safeway Limited, as borrowers, Bankers
Trust Company, as administrative agent, The Chase Manhattan Bank, as syndication
agent, The Bank of Nova Scotia and Bank of America National Trust and Savings
Association, as documentation agents, and the other lenders which are parties
thereto, as such agreement may be amended (including any amendment, restatement
and successors thereof), supplemented or otherwise modified from time to time,
including any increase in the principal amount of the obligations thereunder.
"Capital Lease" means any Indebtedness represented by a lease obligation of
a person incurred with respect to real property or equipment acquired or leased
by such person and used in its business that is required to be recorded as a
capital lease in accordance with GAAP.
"Capital Stock" means any and all shares, interests, participations, rights
or other equivalents (however designated) of corporate stock.
S-21
<PAGE> 22
"Consolidated Net Tangible Assets" means the total amount of our and our
Subsidiaries' assets (less applicable depreciation, amortization and other
valuation reserves) after deducting therefrom:
- all of our and our Subsidiaries' current liabilities; and
- all goodwill, trade names, trademarks, patents, unamortized debt
discount and expenses and other like intangibles, determined on a
consolidated basis in accordance with GAAP.
"Exempted Debt" means the sum of the following as of the date of
determination:
- our Indebtedness incurred after the Closing Date and secured by Liens
not otherwise permitted by the first sentence under Limitation on Liens
above; and
- our and our Subsidiaries' Attributable Liens in respect of sale and
lease-back transactions entered into after the Closing Date, other than
sale and lease-back transactions permitted by the limitation on sale
and lease-back transactions set forth under Limitation on Sale and
Lease-Back Transactions above.
For purposes of determining whether or not a sale and lease-back transaction is
"permitted" by Limitation on Sale and Lease-Back Transactions, the last
paragraph under Limitation on Liens above (creating an exception for Exempted
Debt) will be disregarded.
"Indebtedness" of any person means, without duplication, any indebtedness,
whether or not contingent, in respect of borrowed money or evidenced by bonds,
notes, debentures or similar instruments or letters of credit (or reimbursement
agreements with respect thereto) or representing the balance deferred and unpaid
of the purchase price of any property (including pursuant to Capital Leases),
except any such balance that constitutes an accrued expense or trade payable, if
and to the extent any of the foregoing indebtedness would appear as a liability
upon a balance sheet of such person prepared on a consolidated basis in
accordance with GAAP (but does not include contingent liabilities which appear
only in a footnote to a balance sheet), and shall also include, to the extent
not otherwise included, the guaranty of items which would be included within
this definition.
"Lien" means any lien, security interest, charge or encumbrance of any kind
(including any conditional sale or other title retention agreement, any lease in
the nature thereof, and any agreement to give any security interest).
"Permitted Liens" means:
- Liens securing our Indebtedness under the Bank Credit Agreement and
any initial or subsequent renewal, extension, refinancing, replacement
or refunding thereof;
- Liens on accounts receivable, merchandise inventory, equipment, and
patents, trademarks, trade names and other intangibles, securing our
Indebtedness;
- Liens on any of our assets, any of our Subsidiaries' assets, or the
assets of any Joint Venture to which we or any of our Subsidiaries is a
party, created solely to secure obligations incurred to finance the
refurbishment, improvement or construction of such asset, which
obligations are incurred no later than 24 months after completion of
such refurbishment, improvement or construction, and all renewals,
extensions, refinancings, replacements or refundings of such
obligations;
- (a) Liens given to secure the payment of the purchase price incurred
in connection with the acquisition (including acquisition through
merger or consolidation) of property (including shares of stock),
including Capital Lease transactions in connection with any such
acquisition, and (b) Liens existing on property at the time of
acquisition thereof or at the time of acquisition by us or one of our
Subsidiaries of any person then owning such property whether or not
such existing Liens were given to secure the payment of the purchase
price of the property to which they attach; provided that, with respect
to clause (a), the Liens shall be given within 24 months after such
S-22
<PAGE> 23
acquisition and shall attach solely to the property acquired or
purchased and any improvements then or thereafter placed thereon;
- Liens in favor of customs and revenue authorities arising as a matter
of law to secure payment of customs duties in connection with the
importation of goods;
- Liens upon specific items of inventory or other goods and proceeds of
any person securing such person's obligations in respect of bankers'
acceptances issued or created for the account of such person to
facilitate the purchase, shipment or storage of such inventory or other
goods;
- Liens securing reimbursement obligations with respect to letters of
credit that encumber documents and other property relating to such
letters of credit and the products and proceeds thereof;
- Liens on key-man life insurance policies granted to secure our
Indebtedness against the cash surrender value thereof;
- Liens encumbering customary initial deposits and margin deposits and
other Liens in the ordinary course of business, in each case securing
our Indebtedness under Interest Swap Obligations and Currency
Agreements and forward contract, option, futures contracts, futures
options or similar agreements or arrangements designed to protect us or
any of our Subsidiaries from fluctuations in interest rates, currencies
or the price of commodities;
- Liens arising out of conditional sale, title retention, consignment or
similar arrangements for the sale of goods entered into by us or any of
our Subsidiaries in the ordinary course of business; and
- Liens in our favor or the favor of any of our Subsidiaries.
"Subsidiary" of any specified person means any corporation, association or
other business entity of which more than 50% of the total voting power of shares
of Capital Stock entitled (without regard to the occurrence of any contingency)
to vote in the election of directors, managers or trustees thereof is at the
time owned or controlled, directly or indirectly, by such person or one or more
of the other Subsidiaries of that person or a combination thereof.
S-23
<PAGE> 24
UNDERWRITERS
Under the terms and subject to the conditions set forth in the Underwriting
Agreement, dated November 3, 1998 (the "Underwriting Agreement"), the
underwriters named below (the "Underwriters") have severally agreed to purchase,
and we have agreed to sell to them, severally, the respective principal amount
of the securities set forth opposite their respective names below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT PRINCIPAL AMOUNT
OF NOTES DUE 2000 OF NOTES DUE 2001 OF NOTES DUE 2003 OF NOTES DUE 2008
NAME ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Morgan Stanley & Co. Incorporated..... $180,000,000 $180,000,000 $157,500,000 $112,500,000
BT Alex. Brown Incorporated........... 36,000,000 36,000,000 31,500,000 22,500,000
Chase Securities Inc. ................ 36,000,000 36,000,000 31,500,000 22,500,000
Lehman Brothers Inc. ................. 36,000,000 36,000,000 31,500,000 22,500,000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............... 36,000,000 36,000,000 31,500,000 22,500,000
Salomon Smith Barney Inc. ............ 36,000,000 36,000,000 31,500,000 22,500,000
First Chicago Capital Markets, Inc.... 20,000,000 20,000,000 17,500,000 12,500,000
Scotia Capital Markets (USA) Inc. .... 20,000,000 20,000,000 17,500,000 12,500,000
------------ ------------ ------------ ------------
Total....................... $400,000,000 $400,000,000 $350,000,000 $250,000,000
============ ============ ============ ============
</TABLE>
The Underwriting Agreement provides that the obligations of the several
Underwriters to pay for and accept delivery of the securities are subject to,
among other things, the approval of certain legal matters by their counsel and
certain other conditions. The Underwriters are obligated to take and pay for all
the securities if any are taken.
The Underwriters propose initially to offer part of the securities to the
public at the public offering prices set forth on the cover page hereof and in
part to certain dealers at prices that represent a concession not in excess of
.150% of the principal amount in the case of the Notes Due 2000, .250% of the
principal amount in the case of the Notes Due 2001, .350% of the principal
amount in the case of the Notes Due 2003 and .400% of the principal amount in
the case of the Notes Due 2008. Any Underwriter may allow, and such dealers may
reallow, a concession not in excess of .075% of the principal amount in the case
of the Notes Due 2000, .125% of the principal amount in the case of the Notes
Due 2001, .250% of the principal amount in the case of the Notes Due 2003 and
.250% of the principal amount in the case of the Notes Due 2008 to certain other
dealers. After the initial offering of the securities, the offering price and
other selling terms may from time to time be varied by the Underwriters.
We do not intend to apply for listing of the securities on a national
securities exchange, but have been advised by the Underwriters that they
presently intend to make a market in the securities, as permitted by applicable
laws and regulations. The Underwriters are not obligated, however, to make a
market in the securities and any such market making may be discontinued at the
sole discretion of the Underwriters. Accordingly, no assurance can be given as
to the liquidity of, or trading markets for, the securities.
In order to facilitate the offering of the securities, the Underwriters may
engage in transactions that stabilize, maintain or otherwise affect the price of
the securities. Specifically, the Underwriters may over-allot in connection with
this offering, creating short positions in the securities for their own account.
In addition, to cover over-allotments or to stabilize the price of the
securities, the Underwriters may bid for, and purchase, securities in the open
market. Finally, the Underwriters may reclaim selling concessions allowed to an
underwriter or dealer for distributing securities in this offering, if the
Underwriters repurchase previously distributed securities in transactions that
cover syndicate short positions, in stabilization transactions or otherwise. Any
of these activities may stabilize or maintain the market price of the securities
above independent market levels. The Underwriters are not required to engage in
these activities, and may end any of these activities at any time.
We have agreed to indemnify the Underwriters against certain liabilities,
including liabilities under the Securities Act.
S-24
<PAGE> 25
The Underwriters or their affiliates have provided and may in the future
continue to provide investment banking and other financial services, including
the provision of credit facilities, for us in the ordinary course of business
for which they have received and will receive customary compensation.
LEGAL MATTERS
Latham & Watkins of San Francisco, California, and Michael C. Ross, our
General Counsel, will issue an opinion about certain legal matters with respect
to the securities for Safeway. Certain partners of Latham & Watkins, members of
their families, related persons and others, have an indirect interest, through
limited partnerships, in less than 1% of our common stock. These persons do not
have the power to vote or dispose of such shares of common stock. Brown & Wood
LLP of San Francisco will act as counsel for the underwriters.
S-25
<PAGE> 26
SAFEWAY INC.
DEBT SECURITIES
------------------
We may from time to time sell up to $2,000,000,000 aggregate initial
offering price of our debt securities. These debt securities may consist of
debentures, notes or other types of debt. We will provide specific terms of
these securities in supplements to this prospectus. You should read this
prospectus and any supplement carefully before you invest.
------------------
These securities have not been approved by the Securities and Exchange
Commission or any state securities commission, nor have these organizations
determined that this prospectus is accurate or complete. Any representation to
the contrary is a criminal offense.
------------------
October 27, 1998
<PAGE> 27
WE HAVE NOT AUTHORIZED ANY DEALER, SALESMAN OR OTHER PERSON TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR
INCORPORATED BY REFERENCE IN THIS PROSPECTUS AND THE ACCOMPANYING SUPPLEMENT TO
THIS PROSPECTUS. YOU MUST NOT RELY UPON ANY INFORMATION OR REPRESENTATION NOT
CONTAINED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS OR THE ACCOMPANYING
PROSPECTUS SUPPLEMENT AS IF WE HAD AUTHORIZED IT. THIS PROSPECTUS AND THE
ACCOMPANYING SUPPLEMENT TO THIS PROSPECTUS DO NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE REGISTERED
SECURITIES TO WHICH THEY RELATE, NOR DO THIS PROSPECTUS AND THE ACCOMPANYING
SUPPLEMENT TO THIS PROSPECTUS CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY SECURITIES IN ANY JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER OR SOLICITATION IN SUCH JURISDICTION. THE
INFORMATION CONTAINED IN THIS PROSPECTUS AND THE SUPPLEMENT TO THIS PROSPECTUS
IS ACCURATE AS OF THE DATES ON THEIR COVERS. WHEN WE DELIVER THIS PROSPECTUS OR
A SUPPLEMENT OR MAKE A SALE PURSUANT TO THIS PROSPECTUS, WE ARE NOT IMPLYING
THAT THE INFORMATION IS CURRENT AS OF THE DATE OF THE DELIVERY OR SALE.
-------------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
About this Prospectus....................................... 1
Where You Can Find More Information......................... 1
Disclosure Regarding Forward-Looking Statements............. 2
The Company................................................. 2
Use of Proceeds............................................. 3
Ratio of Earnings to Fixed Charges.......................... 4
Description of Debt Securities.............................. 4
Plan of Distribution........................................ 11
Legal Matters............................................... 12
Experts..................................................... 13
</TABLE>
<PAGE> 28
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement that we filed with the
Securities and Exchange Commission (the "Commission") utilizing a "shelf"
registration process. Under this shelf registration process, we may sell any
combination of the debt securities described in this prospectus in one or more
offerings up to a total dollar amount of $2,000,000,000. This prospectus
provides you with a general description of the securities we may offer. Each
time we sell securities, we will provide a prospectus supplement that will
contain specific information about the terms of that offering. The prospectus
supplement may also add, update or change information contained in this
prospectus. You should read both this prospectus and any prospectus supplement
together with additional information described under the next heading "Where You
Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Commission. You can inspect and copy these reports, proxy
statements and other information at the public reference facilities of the
Commission, in Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549; 7
World Trade Center, Suite 1300, New York, New York 10048; and Suite 1400,
Citicorp Center, 500 W. Madison Street, Chicago, Illinois 60661-2511. You can
also obtain copies of these materials from the public reference section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. Please call the Commission at 1-800-SEC-0330 for further information on
the public reference rooms. The Commission also maintains a web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission
(http://www.sec.gov). You can inspect reports and other information we file at
the office of the New York Stock Exchange, Inc., 20 Broad Street, New York, New
York 10005.
We have filed a registration statement and related exhibits with the
Commission under the Securities Act of 1933, as amended (the "Securities Act").
The registration statement contains additional information about us and the debt
securities. You may inspect the registration statement and exhibits without
charge at the office of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, and you may obtain copies from the Commission at prescribed rates.
The Commission allows us to "incorporate by reference" the information we
file with it, which means that we can disclose important information to you by
referring to those documents. The information incorporated by reference is an
important part of this prospectus, and information that we file later with the
Commission will automatically update and supersede this information. We
incorporate by reference the following documents we filed with the Commission
pursuant to Section 13 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"):
- Annual Report on Form 10-K for the year ended January 3, 1998
(including information specifically incorporated by reference into our
Form 10-K from our 1997 Annual Report to Stockholders and Proxy
Statement for our 1998 Annual Meeting of Stockholders) and Form 10-K/A
filed March 10, 1998;
- Quarterly Reports on Form 10-Q for the quarters ended March 28, 1998,
June 6, 1998 and September 12, 1998;
- Current Reports on Form 8-K filed on July 15, 1998 and October 19,
1998; and
- all documents filed by us with the Commission pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this
prospectus and before we stop offering the debt securities (other than
those portions of such documents described in paragraphs (i), (k), and
(l) of Item 402 of Regulation S-K promulgated by the Commission).
1
<PAGE> 29
You may request a copy of these filings at no cost, by writing or
telephoning us at the following address:
Investor Relations
Safeway Inc.
5918 Stoneridge Mall Road
Pleasanton, California 94588
(925) 467-3790
You should rely only on the information incorporated by reference or
provided in this prospectus and any supplement. We have not authorized anyone
else to provide you with different information.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, including the documents that we incorporate by reference,
contains forward-looking statements within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act. Such statements relate to,
among other things, capital expenditures, cost reduction, cash flow and
operating improvements and are indicated by words or phrases such as
"anticipate," "estimate," "plans," "projects," "continuing," "ongoing,"
"expects," "management believes," "the Company believes," "the Company intends,"
"we believe," "we intend" and similar words or phrases. The following factors
are among the principal factors that could cause actual results to differ
materially from the forward-looking statements: general business and economic
conditions in our operating regions, including the rate of inflation/deflation,
population, employment and job growth in our markets; pricing pressures and
other competitive factors, which could include pricing strategies, store
openings and remodels; results of our programs to reduce costs; the ability to
integrate any companies we acquire and achieve operating improvements at those
companies; relations with union bargaining units; issues arising from addressing
year 2000 information technology issues; opportunities or acquisitions that we
pursue; and the availability and terms of financing. Consequently, actual events
and results may vary significantly from those included in or contemplated or
implied by such statements.
THE COMPANY
We operate a chain of food and drug stores in North America, comprised of
1,381 stores at September 12, 1998. Our U.S. retail operations are located
principally in northern California, southern California, Oregon, Washington,
Colorado, Arizona and the Mid-Atlantic region. Our Canadian retail operations
are located principally in British Columbia, Alberta and Manitoba/Saskatchewan.
In support of our retail operations, we have an extensive network of
distribution, manufacturing and food processing facilities.
In April 1997, we completed a merger with The Vons Companies, Inc. ("Vons")
pursuant to which we issued 83.2 million shares of our common stock for all of
the shares of Vons common stock that we did not already own. We also hold a 49%
interest in Casa Ley, S.A. de C.V. which, as of September 12, 1998, operated 75
food and general merchandise stores in western Mexico.
Our principal executive offices are located at 5918 Stoneridge Mall Road,
Pleasanton, California 94588, and our telephone number is (925) 467-3000.
RECENT DEVELOPMENTS
Dominick's Acquisition. On October 13, 1998, we signed a definitive
agreement to acquire all of the outstanding shares of Dominick's Supermarkets,
Inc. ("Dominick's") for $49 cash per share, or a total of approximately $1.2
billion. At August 8, 1998, Dominick's had outstanding approximately $646
million of debt, most of which we will repay in connection with that
transaction.
Dominick's operates 111 stores in the greater Chicago metropolitan area and
had fiscal 1997 revenues of $2.6 billion. Dominick's also owns and operates two
primary distribution facilities and a dairy processing plant.
2
<PAGE> 30
We commenced a cash tender offer for all of Dominick's outstanding shares
on October 19, 1998, and that tender offer is currently set to expire on
November 16, 1998. Affiliates of The Yucaipa Companies and Apollo Advisors, L.P
that own approximately 41% of the outstanding shares have agreed to tender their
shares in the tender offer and have granted us options to buy their shares at
$49 cash per share upon termination of the definitive agreement in certain
circumstances. Following the successful completion of the tender offer, the
definitive agreement provides that a wholly owned subsidiary of Safeway will be
merged with Dominick's, with Dominick's surviving as our wholly owned
subsidiary.
The acquisition of Dominick's is subject to a number of conditions,
including the valid tender in the tender offer of a majority of Dominick's
outstanding shares (determined on a fully diluted basis, excluding shares
issuable upon exercise of a warrant held by The Yucaipa Companies), the receipt
of certain regulatory approvals and other customary closing conditions. Although
we cannot assure you that all of these conditions will be satisfied or waived,
we believe we will complete the transaction before the end of 1998.
Carr-Gottstein Acquisition. On August 6, 1998, we signed a definitive
agreement to acquire all of the outstanding shares of Carr-Gottstein Foods Co.
("Carr-Gottstein") for $12.50 per share, or a total of approximately $110
million, in a cash merger transaction. In addition, at June 28, 1998,
Carr-Gottstein had outstanding approximately $224 million of debt, substantially
all of which we will repay in connection with that transaction.
Carr-Gottstein is the leading food and drug retailer in Alaska, with 49
stores (including liquor and tobacco stores) primarily located in Anchorage, as
well as Fairbanks, Juneau, Kenai and other Alaska communities. Carr-Gottstein is
Alaska's highest-volume alcoholic beverage retailer through its chain of 17 wine
and liquor stores operated under the name Oaken Keg Spirit Shops. Carr-Gottstein
also operates seven specialty tobacco stores under the name The Great Alaska
Tobacco Company. In addition, Carr-Gottstein's vertically integrated
organization includes freight transportation operations and a full-line food
warehouse and distribution center.
The definitive agreement requires Carr-Gottstein to call a special meeting
of its stockholders where they will be asked to approve the merger of one of our
wholly owned subsidiaries with Carr-Gottstein, with Carr-Gottstein surviving as
our wholly owned subsidiary. An affiliate of Leonard Green & Associates owns
approximately 35% of the outstanding shares and has agreed to vote its shares in
favor of the transaction. Upon completion of the merger, each outstanding
Carr-Gottstein share will be converted into the right to receive $12.50 in cash.
The acquisition of Carr-Gottstein is subject to a number of conditions,
including the approval of a majority of Carr-Gottstein's outstanding shares, the
receipt of certain regulatory approvals and other customary closing conditions.
Safeway and Carr-Gottstein have received a request for additional information
from the Federal Trade Commission, and we and Carr-Gottstein are in the process
of compiling information in response to this request. Although we cannot assure
you that all of these conditions will be satisfied or waived, we believe we will
complete the transaction in early 1999.
Financing the Acquisitions. We intend to finance the acquisitions of
Dominick's and Carr-Gottstein with a combination of bank borrowings and
commercial paper proceeds. In addition to our existing credit agreement and
commercial paper program, we have recently secured the commitment of a group of
lenders to provide up to $500 million of borrowings under a 364-day credit
facility. We may also choose to make public offerings of debt securities.
USE OF PROCEEDS
Unless we indicate otherwise in the applicable prospectus supplement, we
anticipate that any net proceeds will be used for general corporate purposes,
which may include but are not limited to funding our obligations in the
acquisitions of Dominick's and Carr-Gottstein, including repaying or refinancing
bank borrowings or commercial paper proceeds, and for working capital, capital
expenditures and other acquisitions. The factors which we will consider in any
refinancing will include the amount and characteristics of any debt securities
issued and may include, among others, the impact of such refinancing on our
interest coverage, debt-
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to-capital ratio, liquidity and earnings per share. We will set forth in the
prospectus supplement our intended use for the net proceeds received from the
sale of any series of debt securities. Pending the application of the net
proceeds, we expect to invest these proceeds in short-term interest-bearing
instruments or other investment-grade debt securities or to reduce indebtedness
under our commercial paper program or bank credit agreement.
RATIO OF EARNINGS TO FIXED CHARGES
Our ratio of earnings to fixed charges for the periods indicated are as
follows:
<TABLE>
<CAPTION>
FISCAL YEAR
-------------------------------------
1997 1996 1995 1994 1993
----- ----- ----- ----- -----
<S> <C> <C> <C> <C> <C>
Ratio of earnings to fixed charges (a)................. 4.10x 3.63x 2.81x 2.28x 1.51x
</TABLE>
- ---------------
(a) For these ratios, "earnings" represents income before income taxes,
extraordinary loss, equity in earnings of unconsolidated affiliates,
minority interest in subsidiary and fixed charges (other than capitalized
interest). "Fixed charges" represents interest on indebtedness (including
capitalized interest) and a share of rental expense which is deemed to be
representative of the interest factor.
DESCRIPTION OF DEBT SECURITIES
This prospectus describes certain general terms and provisions of our debt
securities. When we offer to sell a particular series of debt securities, we
will describe the specific terms of the series in a supplement to this
prospectus. We will also indicate in the supplement whether the general terms
and provisions described in this prospectus apply to a particular series of debt
securities.
We may offer under this prospectus up to $2,000,000,000 aggregate principal
amount of debt securities, or if debt securities are issued at a discount, or in
a foreign currency or composite currency, such principal amount as may be sold
for an initial public offering price of up to $2,000,000,000. Unless otherwise
specified in a supplement to this prospectus, the debt securities will be our
direct, unsecured obligations and will rank equally with all of our other
unsecured and unsubordinated indebtedness.
The debt securities will be issued under an indenture between us and The
Bank of New York, as trustee. We have summarized select portions of the
indenture below. The summary is not complete. The form of the indenture has been
incorporated by reference as an exhibit to the registration statement and you
should read the indenture for provisions that may be important to you. In the
summary below, we have included references to the section numbers of the
indenture so that you can easily locate these provisions. Capitalized terms used
in the summary have the meaning specified in the indenture.
When we refer to "we," "our" and "us" in this section, we mean Safeway Inc.
excluding, unless the context otherwise requires or as otherwise expressly
stated, our subsidiaries.
GENERAL
The terms of each series of debt securities will be established by or
pursuant to a resolution of our Board of Directors and set forth or determined
in the manner provided in an officers' certificate or by a supplemental
indenture. (Section 2.2) The particular terms of each series of debt securities
will be described in a prospectus supplement relating to such series (including
any pricing supplement).
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We can issue an unlimited amount of debt securities under the indenture
that may be in one or more series with the same or various maturities, at par,
at a premium, or at a discount. We will set forth in a prospectus supplement
(including any pricing supplement) relating to any series of debt securities
being offered, the initial offering price, the aggregate principal amount and
the following terms of the debt securities:
- the title of the debt securities;
- the price or prices (expressed as a percentage of the aggregate
principal amount) at which we will sell the debt securities;
- any limit on the aggregate principal amount of the debt securities;
- the date or dates on which we will pay the principal on the debt
securities;
- the rate or rates (which may be fixed or variable) per annum or the
method used to determine the rate or rates (including any commodity,
commodity index, stock exchange index or financial index) at which the
debt securities will bear interest, the date or dates from which
interest will accrue, the date or dates on which interest will
commence and be payable and any regular record date for the interest
payable on any interest payment date;
- the place or places where principal of, premium and interest on the
debt securities will be payable;
- the terms and conditions upon which we may redeem the debt securities;
- any obligation we have to redeem or purchase the debt securities
pursuant to any sinking fund or analogous provisions or at the option
of a holder of debt securities;
- the dates on which and the price or prices at which we will repurchase
debt securities at the option of the holders of debt securities and
other detailed terms and provisions of these repurchase obligations;
- the denominations in which the debt securities will be issued, if
other than denominations of $1,000 and any integral multiple thereof;
- whether the debt securities will be issued in the form of certificated
debt securities or global debt securities;
- the portion of principal amount of the debt securities payable upon
declaration of acceleration of the maturity date, if other than the
principal amount;
- the currency of denomination of the debt securities;
- the designation of the currency, currencies or currency units in which
payment of principal of, premium and interest on the debt securities
will be made;
- if payments of principal of, premium or interest on the debt
securities will be made in one or more currencies or currency units
other than that or those in which the debt securities are denominated,
the manner in which the exchange rate with respect to these payments
will be determined;
- the manner in which the amounts of payment of principal of, premium or
interest on the debt securities will be determined, if these amounts
may be determined by reference to an index based on a currency or
currencies other than that in which the debt securities are
denominated or designated to be payable or by reference to a
commodity, commodity index, stock exchange index or financial index;
- any provisions relating to any security provided for the debt
securities;
- any addition to or change in the Events of Default described in this
prospectus or in the indenture with respect to the debt securities and
any change in the acceleration provisions described in this prospectus
or in the indenture with respect to the debt securities;
- any addition to or change in the covenants described in this
prospectus or in the indenture with respect to the debt securities;
- any other terms of the debt securities, which may modify or delete any
provision of the indenture as it applies to that series; and
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<PAGE> 33
- any depositaries, interest rate calculation agents, exchange rate
calculation agents or other agents with respect to the debt
securities. (Section 2.2)
We may issue debt securities that provide for an amount less than their
stated principal amount to be due and payable upon declaration of acceleration
of their maturity pursuant to the terms of the indenture. We will provide you
with information on the federal income tax considerations and other special
considerations applicable to any of these debt securities in the applicable
prospectus supplement.
If we denominate the purchase price of any of the debt securities in a
foreign currency or currencies or a foreign currency unit or units, or if the
principal of and any premium and interest on any series of debt securities is
payable in a foreign currency or currencies or a foreign currency unit or units,
we will provide you with information on the restrictions, elections, general tax
considerations, specific terms and other information with respect to that issue
of debt securities and such foreign currency or currencies or foreign currency
unit or units in the applicable prospectus supplement.
TRANSFER AND EXCHANGE
Each debt security will be represented by either one or more global
securities registered in the name of The Depository Trust Company, as Depositary
(the "Depositary"), or a nominee (we will refer to any debt security represented
by a global debt security as a "book-entry debt security"), or a certificate
issued in definitive registered form (we will refer to any debt security
represented by a certificated security as a "certificated debt security") as set
forth in the applicable prospectus supplement. Except as set forth under the
heading "Global Debt Securities and Book-Entry System" below, book-entry debt
securities will not be issuable in certificated form.
CERTIFICATED DEBT SECURITIES. You may transfer or exchange certificated
debt securities at any office we maintain for this purpose in accordance with
the terms of the indenture. No service charge will be made for any transfer or
exchange of certificated debt securities, but we may require payment of a sum
sufficient to cover any tax or other governmental charge payable in connection
with a transfer or exchange.
You may effect the transfer of certificated debt securities and the right
to receive the principal of, premium and interest on certificated debt
securities only by surrendering the certificate representing those certificated
debt securities and either reissuance by us or the trustee of the certificate to
the new holder or the issuance by us or the trustee of a new certificate to the
new holder.
GLOBAL DEBT SECURITIES AND BOOK-ENTRY SYSTEM. Each global debt security
representing book-entry debt securities will be deposited with, or on behalf of,
the Depositary, and registered in the name of the Depositary or a nominee of the
Depositary.
The Depositary has indicated it intends to follow the following procedures
with respect to book-entry debt securities.
Ownership of beneficial interests in book-entry debt securities will be
limited to persons that have accounts with the Depositary for the related global
debt security ("participants") or persons that may hold interests through
participants. Upon the issuance of a global debt security, the Depositary will
credit, on its book-entry registration and transfer system, the participants'
accounts with the respective principal amounts of the book-entry debt securities
represented by such global debt security beneficially owned by such
participants. The accounts to be credited will be designated by any dealers,
underwriters or agents participating in the distribution of the book-entry debt
securities. Ownership of book-entry debt securities will be shown on, and the
transfer of such ownership interests will be effected only through, records
maintained by the Depositary for the related global debt security (with respect
to interests of participants) and on the records of participants (with respect
to interests of persons holding through participants). The laws of some states
may require that certain purchasers of securities take physical delivery of such
securities in definitive form. These laws may impair the ability to own,
transfer or pledge beneficial interests in book-entry debt securities.
So long as the Depositary for a global debt security, or its nominee, is
the registered owner of that global debt security, the Depositary or its
nominee, as the case may be, will be considered the sole owner or holder of
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<PAGE> 34
the book-entry debt securities represented by such global debt security for all
purposes under the indenture. Except as described below, beneficial owners of
book-entry debt securities will not be entitled to have securities registered in
their names, will not receive or be entitled to receive physical delivery of a
certificate in definitive form representing securities and will not be
considered the owners or holders of those securities under the indenture.
Accordingly, each person beneficially owning book-entry debt securities must
rely on the procedures of the Depositary for the related global debt security
and, if such person is not a participant, on the procedures of the participant
through which such person owns its interest, to exercise any rights of a holder
under the indenture.
We understand, however, that under existing industry practice, the
Depositary will authorize the persons on whose behalf it holds a global debt
security to exercise certain rights of holders of debt securities, and the
indenture provides that we, the trustee and our respective agents will treat as
the holder of a debt security the persons specified in a written statement of
the Depositary with respect to that global debt security for purposes of
obtaining any consents or directions required to be given by holders of the debt
securities pursuant to the indenture. (Section 2.14.6)
We will make payments of principal of, and premium and interest on
book-entry debt securities to the Depositary or its nominee, as the case may be,
as the registered holder of the related global debt security. (Section 2.14.5)
Safeway, the trustee and any other agent of ours or agent of the trustee will
not have any responsibility or liability for any aspect of the records relating
to or payments made on account of beneficial ownership interests in a global
debt security or for maintaining, supervising or reviewing any records relating
to beneficial ownership interests.
We expect that the Depositary, upon receipt of any payment of principal of,
premium or interest on a global debt security, will immediately credit
participants' accounts with payments in amounts proportionate to the respective
amounts of book-entry debt securities held by each participant as shown on the
records of such Depositary. We also expect that payments by participants to
owners of beneficial interests in book-entry debt securities held through those
participants will be governed by standing customer instructions and customary
practices, as is now the case with the securities held for the accounts of
customers in bearer form or registered in "street name," and will be the
responsibility of those participants.
We will issue certificated debt securities in exchange for each global debt
security if the Depositary is at any time unwilling or unable to continue as
Depositary or ceases to be a clearing agency registered under the Exchange Act,
and a successor Depositary registered as a clearing agency under the Exchange
Act is not appointed by us within 90 days. In addition, we may at any time and
in our sole discretion determine not to have the book-entry debt securities of
any series represented by one or more global debt securities and, in that event,
will issue certificated debt securities in exchange for the global debt
securities of that series. Global debt securities will also be exchangeable by
the holders for certificated debt securities if an Event of Default with respect
to the book-entry debt securities represented by those global debt securities
has occurred and is continuing. Any certificated debt securities issued in
exchange for a global debt security will be registered in such name or names as
the Depositary shall instruct the trustee. We expect that such instructions will
be based upon directions received by the Depositary from participants with
respect to ownership of book-entry debt securities relating to such global debt
security.
We have obtained the foregoing information concerning the Depositary and
the Depositary's book-entry system from sources we believe to be reliable, but
we take no responsibility for the accuracy of this information.
NO PROTECTION IN THE EVENT OF A CHANGE OF CONTROL
Unless we state otherwise in the applicable prospectus supplement, the debt
securities will not contain any provisions which may afford holders of the debt
securities protection in the event we have a change in control or in the event
of a highly leveraged transaction (whether or not such transaction results in a
change in control) which could adversely affect holders of debt securities.
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<PAGE> 35
COVENANTS
We will set forth in the applicable prospectus supplement any restrictive
covenants applicable to any issue of debt securities.
CONSOLIDATION, MERGER AND SALE OF ASSETS
We may not consolidate with or merge with or into, or convey, transfer or
lease all or substantially all of our properties and assets to, any person (a
"successor person") unless:
- we are the surviving corporation or the successor person (if other
than Safeway) is a corporation organized and validly existing under
the laws of any U.S. domestic jurisdiction and expressly assumes our
obligations on the debt securities and under the indenture;
- immediately after giving effect to the transaction, no Event of
Default, and no event which, after notice or lapse of time, or both,
would become an Event of Default, shall have occurred and be
continuing under the indenture; and
- certain other conditions are met. (Section 5.1)
EVENTS OF DEFAULT
"Event of Default" means with respect to any series of debt securities, any
of the following:
- default in the payment of any interest upon any debt security of that
series when it becomes due and payable, and continuance of that
default for a period of 30 days (unless the entire amount of the
payment is deposited by us with the trustee or with a paying agent
prior to the expiration of the 30-day period);
- default in the payment of principal of or premium on any debt security
of that series when due and payable;
- default in the deposit of any sinking fund payment, when and as due in
respect of any debt security of that series;
- default in the performance or breach of any other covenant or warranty
by us in the indenture (other than a covenant or warranty that has
been included in the indenture solely for the benefit of a series of
debt securities other than that series), which default continues
uncured for a period of 60 days after we receive written notice from
the trustee or we and the trustee receive written notice from the
holders of not less than a majority in principal amount of the
outstanding debt securities of that series as provided in the
indenture;
- certain events of bankruptcy, insolvency or reorganization; and
- any other Event of Default provided with respect to debt securities of
that series that is described in the applicable prospectus supplement
accompanying this prospectus.
No Event of Default with respect to a particular series of debt securities
(except as to certain events of bankruptcy, insolvency or reorganization)
necessarily constitutes an Event of Default with respect to any other series of
debt securities. (Section 6.1) The occurrence of an Event of Default may
constitute an event of default under our bank credit agreements in existence
from time to time. In addition, the occurrence of certain Events of Default or
an acceleration under the indenture may constitute an event of default under
certain of our other indebtedness outstanding from time to time.
If an Event of Default with respect to debt securities of any series at the
time outstanding occurs and is continuing (except as to certain events of
bankruptcy, insolvency or reorganization), then the trustee or the holders of
not less than a majority in principal amount of the outstanding debt securities
of that series may, by a notice in writing to us (and to the trustee if given by
the holders), declare to be due and payable immediately the principal (or, if
the debt securities of that series are discount securities, that portion of the
principal amount as may be specified in the terms of that series) of and accrued
and unpaid interest, if any, on all debt
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<PAGE> 36
securities of that series. In the case of an Event of Default resulting from
certain events of bankruptcy, insolvency or reorganization, the principal (or
such specified amount) of and accrued and unpaid interest, if any, on all
outstanding debt securities will become and be immediately due and payable
without any declaration or other act on the part of the trustee or any holder of
outstanding debt securities. At any time after a declaration of acceleration
with respect to debt securities of any series has been made, but before a
judgment or decree for payment of the money due has been obtained by the
trustee, the holders of a majority in principal amount of the outstanding debt
securities of that series may rescind and annul the acceleration if all Events
of Default, other than the non-payment of accelerated principal and interest, if
any, with respect to debt securities of that series, have been cured or waived
as provided in the indenture. (Section 6.2) For information as to waiver of
defaults see the discussion set forth below under "-- Modification and Waiver."
We refer you to the prospectus supplement relating to any series of debt
securities that are discount securities for the particular provisions relating
to acceleration of a portion of the principal amount of such discount securities
upon the occurrence of an Event of Default.
The indenture provides that the trustee will be under no obligation to
exercise any of its rights or powers under the indenture at the request of any
holder of outstanding debt securities, unless the trustee receives indemnity
satisfactory to it against any loss, liability or expense. (Section 7.1 (e))
Subject to certain rights of the trustee, the holders of a majority in principal
amount of the outstanding debt securities of any series will have the right to
direct the time, method and place of conducting any proceeding for any remedy
available to the trustee or exercising any trust or power conferred on the
trustee with respect to the debt securities of that series. (Section 6.12)
No holder of any debt security of any series will have any right to
institute any proceeding, judicial or otherwise, with respect to the indenture
or for the appointment of a receiver or trustee, or for any remedy under the
indenture, unless:
- that holder has previously given to the trustee written notice of a
continuing Event of Default with respect to debt securities of that
series; and
- the holders of at least a majority in principal amount of the
outstanding debt securities of that series have made written request,
and offered reasonable indemnity, to the trustee to institute the
proceeding as trustee, and the trustee has not received from the
holders of a majority in principal amount of the outstanding debt
securities of that series a direction inconsistent with that request
and has failed to institute the proceeding within 60 days. (Section
6.7)
Notwithstanding the foregoing, the holder of any debt security will have an
absolute and unconditional right to receive payment of the principal of, premium
and any interest on that debt security on or after the due dates expressed in
that debt security and to institute suit for the enforcement of payment.
(Section 6.8)
The indenture requires us, within 120 days after the end of our fiscal
year, to furnish to the trustee a statement as to compliance with the indenture.
(Section 4.3) The indenture provides that the trustee may withhold notice to the
holders of debt securities of any series of any Default or Event of Default
(except in payment on any debt securities of that series) with respect to debt
securities of that series if it in good faith determines that withholding notice
is in the interest of the holders of those debt securities. (Section 7.5)
MODIFICATION AND WAIVER
We and the trustee may modify and amend the indenture with the consent of
the holders of at least a majority in principal amount of the outstanding debt
securities of each series affected by the modifications or amendments. We and
the trustee may not make any modification or amendment without the consent of
the holders of each affected debt security then outstanding if that amendment
will:
- reduce the amount of debt securities whose holders must consent to an
amendment or waiver;
- reduce the rate of or extend the time for payment of interest
(including default interest) on any debt security;
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- reduce the principal of or premium on or change the fixed maturity of
any debt security or reduce the amount of, or postpone the date fixed
for, the payment of any sinking fund or analogous obligation with
respect to any series of debt securities;
- reduce the principal amount of discount securities payable upon
acceleration of maturity;
- waive a default in the payment of the principal of, premium or
interest on any debt security (except a rescission of acceleration of
the debt securities of any series by the holders of at least a
majority in aggregate principal amount of the then outstanding debt
securities of that series and a waiver of the payment default that
resulted from such acceleration);
- make the principal of or premium or interest on any debt security
payable in currency other than that stated in the debt security;
- make any change to certain provisions of the indenture relating to,
among other things, the right of holders of debt securities to receive
payment of the principal of, premium and interest on those debt
securities and to institute suit for the enforcement of any such
payment and to waivers or amendments; or
- waive a redemption payment with respect to any debt security. (Section
9.3)
Except for certain specified provisions, the holders of at least a majority
in principal amount of the outstanding debt securities of any series may on
behalf of the holders of all debt securities of that series waive our compliance
with provisions of the indenture. (Section 9.2) The holders of a majority in
principal amount of the outstanding debt securities of any series may on behalf
of the holders of all the debt securities of such series waive any past default
under the indenture with respect to that series and its consequences, except a
default in the payment of the principal of, premium or any interest on any debt
security of that series or in respect of a covenant or provision which cannot be
modified or amended without the consent of the holder of each outstanding debt
security of the series affected; provided, however, that the holders of a
majority in principal amount of the outstanding debt securities of any series
may rescind an acceleration and its consequences, including any related payment
default that resulted from the acceleration. (Section 6.13)
DEFEASANCE OF DEBT SECURITIES AND CERTAIN COVENANTS IN CERTAIN CIRCUMSTANCES
LEGAL DEFEASANCE. The indenture provides that, unless otherwise provided by
the terms of the applicable series of debt securities, we may be discharged from
any and all obligations in respect of the debt securities of any series (except
for certain obligations to register the transfer or exchange of debt securities
of such series, to replace stolen, lost or mutilated debt securities of such
series, and to maintain paying agencies and certain provisions relating to the
treatment of funds held by paying agents). We will be so discharged upon the
deposit with the trustee, in trust, of money and/or U.S. Government Obligations
or, in the case of debt securities denominated in a single currency other than
U.S. Dollars, Foreign Government Obligations, that, through the payment of
interest and principal in accordance with their terms, will provide money in an
amount sufficient in the opinion of a nationally recognized firm of independent
public accountants to pay and discharge each installment of principal, premium
and interest on and any mandatory sinking fund payments in respect of the debt
securities of that series on the stated maturity of those payments in accordance
with the terms of the indenture and those debt securities.
This discharge may occur only if, among other things, we have delivered to
the trustee an opinion of counsel stating that we have received from, or there
has been published by, the United States Internal Revenue Service a ruling or,
since the date of execution of the indenture, there has been a change in the
applicable United States federal income tax law, in either case to the effect
that, and based thereon such opinion shall confirm that, the holders of the debt
securities of that series will not recognize income, gain or loss for United
States federal income tax purposes as a result of the deposit, defeasance and
discharge and will be subject to United States federal income tax on the same
amounts and in the same manner and at the same times as would have been the case
if the deposit, defeasance and discharge had not occurred. (Section 8.3)
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DEFEASANCE OF CERTAIN COVENANTS. The indenture provides that, unless
otherwise provided by the terms of the applicable series of debt securities,
upon compliance with certain conditions:
- we may omit to comply with the covenants described under the heading
"Consolidation, Merger and Sale of Assets" and certain other covenants
set forth in the indenture, as well as any additional covenants which
may be set forth in the applicable prospectus supplement; and
- any omission to comply with those covenants will not constitute a
Default or an Event of Default with respect to the debt securities of
that series ("covenant defeasance").
The conditions include:
- depositing with the trustee money and/or U.S. Government Obligations
or, in the case of debt securities denominated in a single currency
other than U.S. Dollars, Foreign Government Obligations, that, through
the payment of interest and principal in accordance with their terms,
will provide money in an amount sufficient in the opinion of a
nationally recognized firm of independent public accountants to pay
and discharge each installment of principal of, premium and interest
on and any mandatory sinking fund payments in respect of the debt
securities of that series on the stated maturity of those payments in
accordance with the terms of the indenture and those debt securities;
and
- delivering to the trustee an opinion of counsel to the effect that the
holders of the debt securities of that series will not recognize
income, gain or loss for United States federal income tax purposes as
a result of the deposit and related covenant defeasance and will be
subject to United States federal income tax on the same amounts and in
the same manner and at the same times as would have been the case if
the deposit and related covenant defeasance had not occurred. (Section
8.4)
COVENANT DEFEASANCE AND EVENTS OF DEFAULT. In the event we exercise our
option to effect covenant defeasance with respect to any series of debt
securities and the debt securities of that series are declared due and payable
because of the occurrence of any Event of Default, the amount of money and/or
U.S. Government Obligations or Foreign Government Obligations on deposit with
the trustee will be sufficient to pay amounts due on the debt securities of that
series at the time of their stated maturity but may not be sufficient to pay
amounts due on the debt securities of that series at the time of the
acceleration resulting from the Event of Default. However, we shall remain
liable for those payments.
"FOREIGN GOVERNMENT OBLIGATIONS" means, with respect to debt securities of
any series that are denominated in a currency other than U.S. Dollars:
- direct obligations of the government that issued or caused to be
issued such currency for the payment of which obligations its full
faith and credit is pledged which are not callable or redeemable at
the option of the issuer thereof; or
- obligations of a person controlled or supervised by or acting as an
agency or instrumentality of that government the timely payment of
which is unconditionally guaranteed as a full faith and credit
obligation by that government which are not callable or redeemable at
the option of the issuer thereof.
GOVERNING LAW
The indenture and the debt securities will be governed by, and construed in
accordance with, the internal laws of the State of New York. (Section 10.10)
PLAN OF DISTRIBUTION
We may sell the debt securities to one or more underwriters for public
offering and sale by them and may also sell the debt securities to investors
directly or through agents. We will name any underwriter or agent involved in
the offer and sale of debt securities in the applicable prospectus supplement.
We have reserved the
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right to sell or exchange debt securities directly to investors on our own
behalf in those jurisdictions where we are authorized to do so.
We may distribute the debt securities from time to time in one or more
transactions:
- at a fixed price or prices, which may be changed;
- at market prices prevailing at the time of sale;
- at prices related to such prevailing market prices; or
- at negotiated prices.
We may also, from time to time, authorize dealers, acting as our agents, to
offer and sell debt securities upon the terms and conditions set forth in the
applicable prospectus supplement. In connection with the sale of debt
securities, we, or the purchasers of debt securities for whom the underwriters
may act as agents, may compensate underwriters in the form of underwriting
discounts or commissions. Underwriters may sell the debt securities to or
through dealers, and those dealers may receive compensation in the form of
discounts, concessions or commissions from the underwriters and/or commissions
from the purchasers for whom they may act as agent. Unless otherwise indicated
in a prospectus supplement, an agent will be acting on a best efforts basis and
a dealer will purchase debt securities as a principal, and may then resell the
debt securities at varying prices to be determined by the dealer.
We will describe in the applicable prospectus supplement any compensation
we pay to underwriters or agents in connection with the offering of debt
securities, and any discounts, concessions or commissions allowed by
underwriters to participating dealers. Dealers and agents participating in the
distribution of debt securities may be deemed to be underwriters, and any
discounts and commissions received by them and any profit realized by them on
resale of the debt securities may be deemed to be underwriting discounts and
commissions. We may enter into agreements to indemnify underwriters, dealers and
agents against certain civil liabilities, including liabilities under the
Securities Act, and to reimburse these persons for certain expenses.
To facilitate the offering of debt securities, certain persons
participating in the offering may engage in transactions that stabilize,
maintain, or otherwise affect the price of the debt securities. This may include
over-allotments or short sales of the debt securities, which involves the sale
by persons participating in the offering of more debt securities than we sold to
them. In these circumstances, these persons would cover such over-allotments or
short positions by making purchases in the open market or by exercising their
over-allotment option. In addition, these persons may stabilize or maintain the
price of the debt securities by bidding for or purchasing debt securities in the
open market or by imposing penalty bids, whereby selling concessions allowed to
dealers participating in the offering may be reclaimed if debt securities sold
by them are repurchased in connection with stabilization transactions. The
effect of these transactions may be to stabilize or maintain the market price of
the debt securities at a level above that which might otherwise prevail in the
open market. These transactions may be discontinued at any time.
Certain of the underwriters, dealers or agents and their associates may
engage in transactions with and perform services for Safeway in the ordinary
course of our business.
LEGAL MATTERS
Latham & Watkins of San Francisco, California, will issue an opinion about
certain legal matters with respect to the debt securities for Safeway. Certain
partners of Latham & Watkins, members of their families, related persons and
others, have an indirect interest, through limited partnerships, in less than 1%
of our common stock. These persons do not have the power to vote or dispose of
such shares of common stock. Any underwriters will be advised about the other
issues relating to any offering by their own legal counsel.
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EXPERTS
Our consolidated financial statements as of January 3, 1998 and December
28, 1996 and for each of the three fiscal years in the period ended January 3,
1998, which are incorporated by reference herein from our Annual Report on Form
10-K for the year ended January 3, 1998, have been audited by Deloitte & Touche
LLP, independent auditors, as stated in their report, which is also incorporated
by reference herein, and have been so included in reliance upon the report of
such firm given upon their authority as experts in accounting and auditing.
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[LOGO OF SAFEWAY INC.]
